Supreme Decree 21060

Supreme Decree 21060 (Spanish: Decreto Supremo 21060, DS 21060, or DS Nº 21060), promulgated by Bolivian President Víctor Paz Estenssoro on 29 August 1985, was a legal instrument that imposed neoliberal economic policies in order to end Bolivia's twin crises of international debt and hyperinflation.

In 1985, under the fourth (and final) term of President Paz Estenssoro, the economic situation in Bolivia was undermined with a galloping hyperinflation (inherited from Hernán Siles Zuazo) and the country was unable to pay its debt to the International Monetary Fund (IMF). A plan was drawn by Jeffrey Sachs, Professor at Harvard University, and at that time active as economic adviser to the Bolivian government. Bolivia was the first country where Jeffrey Sachs could test his theories.[1]

The IMF approved of the decree's adoption and gave the Bolivian government $57 million in credit. Additionally, the World Bank began lending money to the country again.

Measures implemented

The main "shock therapy" measures of decree 21060 in Bolivia were:

Impact on the economy

In the short term, the decree smothered hyperinflation. Within a few months, inflation had dropped from peaks of 20,000 to between 10–20 percent. When Jeffrey Sachs left the country in 1987 it had fallen to 11 percent.

See also

External links

References

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