La Paz - The left-wing populist government of Bolivia and the country's opposition were optimistic ahead of a meeting of South American presidents Monday in Santiago to discuss the Bolivian crisis.

The opposition governor of the province of Tarija, Mario Cossio, said in the early hours of Monday that the two sides had almost agreed on the draft of a joint statement.

Cossio - representing the Democratic National Council (Conalde) that brings the opposition together - met with a government delegation headed by Vice President Alvaro Garcia Linera for eight hours in La Paz.

At issue were the huge issues of distribution of funds raised through taxes on the production of hydrocarbons, the autonomy movements in five of the country's nine provinces and the draft for a new constitution.

Cossio said the statement was set to be signed later Monday, when President Evo Morales returns from an emergency summit meeting of South American leaders that was set to be held in Santiago.

Bolivian Deputy Minister for Decentralization Fabian Yaksic also expressed his hope that the document could be signed Monday.

Nine presidents including regional leader Luiz Inacio Lula da Silva were travelling to the Chilean capital in order to discuss the Bolivian crisis. Bolivia's neighbours have expressed their wish to mediate in the political conflict that has been escalating for months and left at least 16 people dead last week.

On Sunday, Morales ordered the arrest of the governor of the Pando region, Leopoldo Fernandez, a leading opposition member, saying he must be put away for 30 years.

Fernandez allegedly orchestrated a "massacre" in Pando on Thursday, in which hired killers from Peru and Brazil killed dozens of government supporters, Vice President Alvaro Garcia Linera said.

At least 25 people were killed in the Pando clashes, unofficial reports said. The authorities have so far confirmed 16 deaths.

Bolivia's crisis centres on Morales' plans to hold a referendum on a new constitution in December, at the centre of his efforts to redistribute Bolivia's wealth in favour of the impoverished indigenous majority.

His opponents, descendants of European immigrants in the south and east of the country, are demanding the return of the tax levied on oil and natural gas revenues which is currently used to provide pensions for all citizens over 60.

Morales declared a state of emergency for Pando on Friday and the military regained control over the provincial capital Cobija, without the previously feared firefights with opposition protestors, Bolivian media said.

International media representatives complained, however, that the military prevented journalists from entering Cobjia.

Meanwhile, Branko Marinkovic, a key opposition leader, ordered the lifting of roadblocks in the wealthy Santa Cruz region, as a sign of goodwill. (dpa)