Spain has agreed to cancel the $87 million debt it is owed by Bolivia in an effort to help the impoverished South American country's development.

Spanish Prime Minister Jose Luis Rodriguez Zapatero said Tuesday that 60 percent of the debt would be forgiven entirely, while Bolivia's government will invest the remaining 40 percent in education programs.

The prime minister spoke in Madrid during a news conference with Bolivian President Evo Morales. The Bolivian leader said the pardon creates trust not just between the two governments but also between the Spanish and Bolivian people.

The two sides also signed an agreement allowing Bolivians in Spain to vote in municipal elections.

Mr. Zapatero vowed to give "a new horizon" to Bolivians in Spain, saying they "deserve to be treated with the utmost dignity and rights."

About 250,000 Bolivians live in Spain, with only 98,000 of them legal residents.

After arriving in Spain Sunday, the Bolivian president gave a speech to Bolivian immigrants and promised to defend their rights.  He also denounced plans by the United States to use military bases in Colombia. 

However, President Morales said Bolivia had no plans to break off ties with Colombia over the matter.

On Monday, Mr. Morales addressed a gathering of business leaders.  He said he welcomes international investment in Bolivia's natural resource sector as long as the companies work as partners and not owners.

Some information for this report was provided by AP and Reuters.