Thanks to high commodity prices and a prudent macroeconomic policy, economic growth has averaged 4.8% over the past seven years. Despite these advances, moderate poverty affects nearly half of the population and income inequality continues to be high. Read More »
Bolivia has recently achieved political stability after President Evo Morales launched political and economic reforms starting in 2005. Reforms included a major modification of the Constitution, the strengthening of the role of the state in the economy and the application of a variety of social programs. Strong citizen support for President Morales led to his re-election in 2009. The country’s next elections are scheduled for 2014.
As a result of high-priced raw material exports such as natural gas, and a prudent macroeconomic policy, Bolivia’s economic growth has averaged 4.8% over the past seven years. The country has had significant current account surpluses since 2003 and the fiscal balance became positive in 2006.
Due to this performance and the overall debt relief, gross public debt declined from 94% of the Gross Domestic Product (GDP) in 2003 to less than 40% in 2012. International reserves increased from nearly US$1 billion to over US$14 billion in recent years. Bank deposits and loans have more than tripled during the past seven years and banks have strengthened their solvency and liquidity. Poverty declined from 63% in 2002 to 45% in 2011.
Despite these advances, Bolivia continues to face significant challenges. Moderate poverty affects nearly half of the population and income inequality remains high. In addition, the recent economic growth is vulnerable to changes in international commodity prices.
Private investment requires strengthening and the large government-backed investment projects in extractive industries are behind schedule. Informal employment is high, which results in lower productivity. While there have been noteworthy advances in productive development in rural areas, where a third of the total population lives, further progress has been hindered by precarious infrastructure and services.
Governance of the public sector must be strengthened to improve public policy implementation. Several social indicators are below regional standards.
The current Country Partnership Strategy (CPS) was discussed in December 2011 and will guide World Bank activities throughout the 2012-2015 fiscal period.
Based on governmental priorities, the results of consultations and the Bank’s comparative advantages, the strategy proposes a flexible program of technical assistance and financing through investment projects and donations in four results areas:
Sustainable productive development. This area includes projects to improve agricultural production, promote access to land, build infrastructure and enhance producers’ access to markets.
Climate change and disaster risk management. This area covers activities to support disaster risk management and the rehabilitation of basic infrastructure. It also helps the country to address the impact of climate change in its public policies.
Human development and access to basic services. This area contemplates activities to promote access to basic and maternal and child health services. It also seeks to reduce malnutrition and promote early childhood development, secondary school education and youth employment.
Public sector effectiveness. This area supports the implementation of a population, housing and agricultural census, as well as the improvement of household surveys. It also includes other activities to improve the public administration.
The CPS design took into account crosscutting issues such as gender equality, good governance and the fight against corruption.
During the first two years of implementation, the CPS approved three new projects and additional financing for US$153 million.
The CPS promotes the implementation of the current portfolio, comprised of 13 investment projects in the four results areas. A total of US$ 495 million have been allocated to these projects, of which US$ 312 million still need to be disbursed. Bolivia continues to benefit from International Development Association (IDA) financing. In addition, with the recent access to financing from the International Bank for Reconstruction and Development (IBRD), projects are being developed for US $250-395 million, which will be subject to approval in fiscal year 2014.
Bank activities in Bolivia also include several donations to support initiatives in rural electrification, adaptation to climate change, biodiversity conservation, early childhood care, community development and inclusion of women in productive partnerships.
Currently, the bank is working with the government to update the CPS to align it with the objectives of the 2025 Patriotic Agenda, which was announced by the government in early 2013. The CPS will maintain is results-based focus and emphasis on eliminating extreme poverty and promoting shared prosperity.
The International Finance Corporation (IFC) will continue to finance high-impact private initiatives in sectors such as microfinance, agribusiness and forestry. It will also support the simplification of public procedures in the construction sector and in the development of small and medium-sized enterprises.
In line with the priorities of the Bolivian government and the competitive advantages of the World Bank with respect to other development partners, many of the activities in Bolivia have focused on rural development.
The Rural Alliances Project (PAR) has supported 772 partnerships and has trained nearly 45,000 rural producers in an effort to improve their production processes in line with market requirements. Approximately 29,000 families have directly benefited from financing for business plans.
In 2012, the United Nation’s Food and Agriculture Organization (FAO) conducted an independent assessment of 140 concluded partnerships. This evaluation found a 79% gross income increase per beneficiary family, on average, as compared with non-participating families. The PAR has been expanded to benefit an additional 35,000 individuals.
The Land for Agricultural Development Project has helped 237 producer associations access land and credit to increase their production and has provided technical assistance and non-reimbursable funds to three municipalities in Santa Cruz Department. The project is currently expanding to two additional municipalities. Project activities have benefited more than 2,800 families living in poverty, including those residing in indigenous communities, and have resulted in the incorporation of nearly 150,000 hectares of land for agricultural use.
With respect to the improvement of rural infrastructure, the Participatory Development ProjectII financed 244 investment projects in 194 municipalities. Sixty-three irrigation sub-projects have been implemented, benefiting more than 15,400 people and 168 sub-projects for transport infrastructure (roads and foot and vehicle bridges) have favored over 340,000 individuals. The project also implemented sub-projects in environmental businesses and productive promotion (agricultural fairs, basins, ethno-ecotourism, soil conservation and markets), benefiting more than 77,000 people.
In addition, 132 sub-projects were prepared in pre-investment in irrigation systems, transport infrastructure and ethno-ecotourism and soil management and conservation.
The project also trained 30,700 members of 418 civil organizations and municipal governments in the preparation, management and evaluation of sub-national plans, programs, projects and tools.
The Emergency Recovery and Disaster Management Project is rehabilitating basic infrastructure damaged by the El Niño and La Niña phenomena and is strengthening the government’s capacity for natural disaster response. It is also building national institutional capacities in nine sectors in the management of information, disaster risk management and monitoring of hydro-meteorological threats. By the end of the project, 244 projects in road rehabilitation, water and basic sanitation, irrigation, river protection, health and education are expected to be completed, benefiting more than 400,000 inhabitants of municipalities with high poverty rates.
The World Bank has also developed initiatives in the fields of education, employment and infrastructure in urban areas:
The Secondary Education Transformation Project in La Paz has contributed to improving infrastructure in seven schools serving more than 6,000 students in marginal urban areas. This has increased secondary school enrolment in participating schools and reduced the repetition rate by providing more than 10,000 students with academic reinforcement courses. The project also supported the establishment of management teams to implement education plans that benefited nearly 80,000 students and trained over 1,500 teachers, principals and school board members in citizen values and attitudes with respect to sexual and reproductive health, human rights, violence and gender.
The Investing in Children and Youth Project is currently benefiting over 600 low-income youth living in urban and peri-urban areas by providing them with technical training based on studies of local market supply and subsequently through minimum-wage internships with companies. This training seeks to improve these youth’s employability.
The Urban Infrastructure Project enabled 35,000 Santa Cruz residents to access the sanitation network. This project has also achieved the overall enhancement of 22 neighborhoods in La Paz by improving infrastructure and providing basic services, benefiting more than 18,000 people. The project was expanded to an additional 24 neighborhoods, where an estimated 24,000 people will benefit. In El Alto City, the Bank financed infrastructure investments to improve three roads in an effort to eliminate bottlenecks and improve north-south connections in the city. The project will also expand the network of urban roads and improve infrastructure for alternative transportation, such as bike lanes, for example.