Overview

Bolivia achieved political stability after President Evo Morales launched a reform in 2006. This reform included a major modification of the Constitution, the strengthening of the role of the state in the economy and the implementation of several social programs.  Strong citizen support for President Morales led to his re-election in 2009 and again in October 2014, with 61% of the vote.

Thanks to high commodity prices and a prudent macroeconomic policy, economic growth has averaged 4.9% since 2004. The country has had current account surpluses since 2003 and significant fiscal surpluses between 2006 and 2013. In 2014, the fiscal deficit exceeded 3% of GDP due mainly to extraordinary expenses incurred in response to natural disasters at the beginning of the year.

Due to this performance and the overall debt relief, public debt declined from 94% of GDP in 2003 to less than 40% in 2013. International reserves increased from nearly US$1 billion to over US$15 billion in recent years. Bank deposits and loans have increased fivefold over the past 10 years and banks have strengthened their solvency and liquidity.

The positive economic context led to a reduction in moderate poverty, from 63% in 2002 to 45% in 2012, whereas the Gini Index fell from 0.60 to 0.46 in the same period. These extraordinary results reflect the fact that citizens living in poverty were the population segment that most benefitted from the economic bonanza, through an increase in household income. A variety of social programs complemented this increase. As a result, between 2002 and 2011, average income of the poorest 40% of the population grew three times more rapidly than average income.

Despite these advances, Bolivia faces significant challenges. Moderate poverty affects 45% of the population and income inequality remains high. In addition, several social indicators still fall short of regional averages. Although the cushions accumulated during the bonanza protect macroeconomic stability in the medium term, Bolivia is still vulnerable to a sustained reduction in raw material prices, especially oil, which affects gas export 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 population lives, precarious infrastructure and services have hindered further progress. Additionally, the country faces important challenges in terms of governance and efficiency of the public sector to improve policy implementation and service delivery.

Last Updated: Apr 15, 2015

The Country Partnership Strategy (CPS) is in its fourth and final year. Representatives of the Plurinational State of Bolivia and the World Bank are discussing a new cooperation framework to define the activities of the World Bank Group over the next five years. To develop the new framework, an independent team will first conduct a rigorous assessment of the country’s challenges and opportunities with respect to reducing extreme poverty and promoting shared prosperity.

The current CPS (2012-2015) will continue to guide the work of the World Bank Group until the new CPS is submitted to the World Bank’s Board of Directors. The strategy has a flexible technical assistance and financing program through investment projects and grants in four results areas:

  • sustainable productive development;
  • climate change and disaster risk management;
  • human development and access to basic services; and
  • public sector efficiency.

Crosscutting CPS themes are gender equality, good governance and the fight against corruption.

During the remainder of the CPS period, Bolivia will continue to benefit from credits issued by the International Development Association (IDA). It will also have access to financing and the range of financial solutions offered by the International Bank for Reconstruction and Development (IBRD). The current World Bank Group portfolio includes 12 investment projects totaling US$ 706 million.

In addition, the International Finance Corporation (IFC) will continue to support private-sector development opportunities. Its program focuses on improving the investment climate, simplifying public procedures, increasing access to financing for the agricultural sector, and training owners of small and medium-sized enterprises.

 

Last Updated: Apr 15, 2015

The World Bank Group is satisfactorily achieving results of the technical assistance and financing program in the four priority areas of the CPS.

  • Productive Sustainable Development

Results for this pillar included support to 770 producers’ organizations in 110 rural municipalities, benefiting 29,000 families, 90% of which are indigenous. Households participating in the Rural Partnerships Project (RPP) increased net income by 206% as compared with non-participants. The second phase of the project is expected to benefit 40,000 families.

Likewise, through the government’s Regional Concurrent Development Project (PDCR), the World Bank supports investment sub-projects in productive infrastructure and basic infrastructure in 180 departmental and municipal governments. Two hundred and forty-four investment sub-projects have been financed in irrigation, transportation infrastructure and productive promotion, benefitting more than 430,000 people.

The Community Investment in Rural Areas Project (PICAR) currently benefits 26,000 families in vulnerable communities throughout the country. One hundred and fifty-seven sub-projects are currently being implemented, including irrigation canals, water collection systems, greenhouses, latrines, livestock fences and wells.

The Agricultural Land Development Project (Pro-Tierras) has helped 237 producer associations use their land more effectively. It has provided non-reimbursable funds to increase production and technical assistance in five municipalities of Santa Cruz Department, in El Chaco and Chiquitanía. Project activities have benefited more than 2,800 families living in poverty, including those residing on indigenous lands, and have resulted in the incorporation of nearly 150,000 hectares of land for agricultural use.

  • Climate Change and Disaster Risk Management

The World Bank supports disaster risk management and climate change adaptation through grants, concessional credits, budget support operations and technical assistance.  The Emergency Recovery and Disaster Management Project (PREGD) has implemented 244 sub-projects to rehabilitate roads and infrastructure in water and basic sanitation, irrigation, river protection, health and education that was damaged by El Niño and La Niña weather phenomena, benefiting more than 400,000 inhabitants of municipalities with high poverty rates. It has also strengthened institutional skills in nine national sectors and the government’s disaster response capacity by reinforcing risk information management and monitoring of hydro-meteorological threats. Currently, a climate change adaptation pilot program is being implemented for basin management in the departments of Santa Cruz and Cochabamba.

The World Bank recently approved US$200 million in financing to strengthen Bolivia’s legal and institutional framework for integrated disaster and climate risk management. The International Development Association (IDA) will provide half of these funds through concessional credits whereas the International Bank for Reconstruction and Development (IBRD) will provide the remainder. For the first time in 10 years, Bolivia qualifies for this type of public policy financing, which is normally granted to middle-income countries. The program will help implement the new Risk Management Law.

The most important contribution of the Pilot Program for Climate Resilience (PPCR) is the design of a National Climate Resilience Strategy (NCRS) that defines program priorities and organizes interventions into three main work areas: public policies, specific sectors and basin management. Multi- and bilateral development agencies are using the NCRS to target their support for a second phase of contributions totaling more than US$ 40 million over the next few years.

  • Human Development and Access to Basic Services

The World Bank contributes to improving early childhood care in populations with increased vulnerability to parental loss or risk of abandonment through a project to enhance the quality of care and improve ongoing training and professionalization of educators and facilitators of 152 public childcare centers (birth to age four) in La Paz and El Alto.

The Project to Reduce Health Inequality through Expansion and Access (APLIII) seeks to reduce maternal and child mortality and risk factors in vulnerable populations. To this end, the project remodeled, expanded and equipped two health centers that will benefit 40 indigenous communities of Tacopaya Municipality in Cochabamba, 22 health centers in La Paz Municipality and two centers in Oruro. It also equipped other health networks.

Since 2003, the World Bank has been supporting programs to expand electric service coverage in rural and peri-urban areas of Bolivia. Interventions such as the Decentralized Infrastructure Project for the Transformation of Rural Areas brought electricity to more than 30,000 homes, 118 schools, health posts and a microenterprise.

Real Neighborhoods is a key program of the La Paz municipal government. The World Bank, through the Urban Infrastructure Project approved in 2006, supported improved public lighting, drainage and sanitation facilities, disaster risk mitigation works and public recreational facilities, among others, in 22 low-income La Paz neighborhoods. Forty-five thousand people in peri-urban areas benefitted from the program’s comprehensive intervention. Additional financing has been approved to benefit 24 new neighborhoods in La Paz.

  • Support to Public Sector Efficiency

The  Project to Strengthen and Modernize the Statistics System has supported the implementation of two recent national censuses – one on population and housing and the other on agriculture – in addition to improving continuous household surveys and updating multipurpose maps. To complement these activities, the World Bank supported efforts to improve poverty measurement, including the preparation of new poverty maps and the definition of multidimensional indicators for the Living Well Index.

With the Open Aid Platform, Bolivia has become the first country in Latin America to georeference thousands of development projects. The Public Investment Map of Bolivia is designed to collect and disseminate information. The platform offers online, real-time access to information on 31,000 public investment projects to indigenous communities, local governments, the press and other interested parties.

Last Updated: Apr 15, 2015


LENDING

Bolivia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments