The Provision of Public Services and the Debt Crisis in Latin America: The Case of Bogotá

Abstract

The debt crisis in Latin America has threatened urban living standards in many ways. One that has been discussed relatively little is the effect on service and infrastructure provision. Having contracted massive loans during the 1970s to increase capacity, service agencies have been severely affected by rising interest charges and declines in effective demand. In Bogotá, agencies are being forced to react by raising user charges rapidly, leading to rising levels of corruption. Criticism now directed at these agencies is undermining their previously high reputation. World Bank policy to develop efficient service agencies in Latin American cities is now being undermined by the cost of loan repayments to that agency.