Spanish officials said Mr Morales had agreed that the $120m (99m euros; £68m) debt would be spent on improving educational programmes in Bolivia.
Spain also promised to help Bolivia's agricultural sector.
Mr Morales said Bolivia needed foreign partners but they would not be "masters of our natural resources".
He has met Spain's King Juan Carlos, socialist Prime Minister Jose Luis Rodriguez Zapatero and other officials as part of an international tour ahead of his inauguration.
Mr Morales also held talks with a number of business leaders, including the head of the energy giant Repsol.
In response to the offer of cutting the debt, Mr Morales said: "This is a great relief for me. We want to put an end to our country's illiteracy rate."
Yes, we will nationalise - but that does not mean confiscate, expropriate or expel Evo Morales
He also urged Spanish society to "accompany" Bolivia on its new political course, which he said would be focused on the fight against poverty.
Spain is the third biggest foreign investor in Bolivia. Mr Morales told reporters his country needed "partners, foreign investors, but not owners of our natural resources".
"My government... is going to exercise its property right over its natural resources," he added.
He said this did not mean his government would confiscate or expropriate resources or evict companies.
A raging struggle over who should exploit Bolivia's large natural gas reserves has forced two presidents to resign in recent years.
Mr Morales - who will become the country's first indigenous president - won the December election on pledges to increase social spending and turn away from free-market policies.
On Tuesday, Mr Morales visited Venezuela, where he pledged to join President Hugo Chavez in a fight against "neo-liberalism and imperialism".
Mr Morales last week held talks in Cuba with its leader Fidel Castro. He will also visit France, Belgium, South Africa, China and Brazil.His next stops in Europe are France and Belgium. After Europe, he will travel to South Africa at the personal invitation of Nelson Mandela.
His 10-day tour of seven countries does not include the US.
Mr Morales was elected president with nearly 54% of the vote, the biggest support for any candidate since democracy was restored in Bolivia in the 1980s.
Story from BBC NEWS:
An article commentary on this could discuss the significance of debt elimination for the third world. Since the conference in Gleneagles some of the poorest countries in the world have had their debts to institutions such as the IMF completely eliminated which is of great significance for their economic development. Some possible benefits of this elimination that could be discussed in the commentary include things such as the countries ability to now use all of their income to fund their development drive as opposed to having to pay off debts, also they could spend money in purchasing and providing HIV treatment which is hampering the economies of most African and Latin American countries as most of their workforce is too ill to work. Another issue that could be talked about in a commentary is the impact of multinationals and FDI in a country's development. Without it countries such as Bolivia, Costa Rica and Mexico would have an economy half the size of what it is today. The main reason behind this is that in today's globalised society multinationals have become the driving force behind development and the fact that there is such investment in Bolivia as explained by the article is of great significance because only in this way can the citizens obtain machinery and resources to finally manage to stand on their own two feet and reach the final stages of the development process.
http://news.bbc.co.uk/go/pr/fr/-/2/hi/europe/4580934.stmPublished: 2006/01/05 10:07:24 GMT
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