Source:
CEDLA
Tue Jun 12 2007
Public debt prospects for the future are quite alarming. On the one hand, cancellation by the Inter-American Development Bank and World Bank would be reducing concessional sources of finance, a situation that might lead the Government to apply for hard loans (with higher interest rates than concessional ones and shorter terms for payment). On the other hand, there is an increasing trend regarding access to Andean Development Corporation loans, which results in high costs in terms of service.
In 2006, these amounted to 54 per cent of total service.
The internal debt, in turn, translates into high financial costs – costs that would bring about an increase in terms of service and might become even worse as from 2012, when the Government launches principal repayment of debts incurred with Pension Fund Administrators (AFP, in Spanish). But social costs could turn out to be even higher, depending on the measures taken in order to reduce its participation, since the resources borrowed by the State from AFPs represent slightly over 70 per cent of the Individual Capitalization Fund (FCI, in Spanish) which, as it is well known, are workers’ retirement contributions
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