Bolivia : FY96 counternarcotics cash transfer -- program assistance approval document : 511-0639

U.S. dollars will be used to help reduce Bolivia"s external non-military U.S. bilateral and multilateral debt. Local currency generations will be limited to 10% of dollar disbursements and will be deposited in the USAID local currency Trust Fund Account. Disbursements will be in two equal tranches. The first tranche will be disbursed when coca eradication has reached at least 2,500 hectares during CY 1996 and the GOB is proceeding with eradication efforts at a rate consistent with achieving annual eradication goals established by Law 1008. The second tranche will be disbursed when the GOB has made satisfactory progress in: (1) meeting eradication targets consistent with Law 1008; (2) developing and implementing an effective assets seizure and forfeiture program that allows the sale of forfeited assets to generate funds to be directed at counternarcotics efforts; and (3) executing a law prohibiting money laundering and developing the necessary regulations and implementing capacity to enforce it. The program"s eradication conditionality will encourage Chapare farmers to engage in licit income-earning crops, thereby contributing to the achievement of Intermediate Result 1 under the Economic Opportunity Strategic Objective (SO), "Expanded licit income-earning opportunities for the poor". In addition, implementation of an effective assets seizure program and execution of a money laundering law will significantly contribute to the democracy initiatives Secondary Intermediate Results 1, "Institutional capacity of key justice sector agencies improved including management systems and police officials skills." The money laundering law will also contribute to improving ethics practices under Intermediate Results 2, "Public sector institutions made increasingly accountable, transparent and responsive." Amendment of 1/9/97 increases cash transfer by $19 million, to be disbursed in three tranches, and adds new conditionality, including a written GOB commitment to conduct a systematic campaign to eliminate all new coca and coca seedbeds found in nontraditional areas, and continuing progress in meeting eradication targets consistent with Law 1008. More specific eradication targets and conditions related to interdiction performance will be transmitted to the GOB in separate documentation. (PD-ABP-017)