Overview

Thanks to high commodity prices and a prudent macroeconomic policy, economic growth in Bolivia averaged 4.9 percent between 2004 and 2014. The favorable economic context reduced moderate poverty from 59 percent in 2005 to 39 percent in 2014, while the Gini Index fell from 0.60 to 0.47 in the same period.

Due to a more challenging international context, GDP growth decreased from 5.5 percent in 2014 to 4.8 percent in the first half of 2015. Domestic demand remained strong given that the delayed effect of oil prices on natural gas export prices mitigated the decline in fiscal income. The effect of low commodity prices on domestic demand was also contained by the important cushions accumulated during the boom. International reserves decreased by US$2.1 billion in 2015, but they remain high at nearly US$13 billion, whereas fiscal savings are approximately 25 percent of GDP and public debt is less than 40 percent of GDP.

In an effort to maintain strong growth, assure continued poverty reduction and improve access to basic services, the Government of Bolivia approved the National 2016-2020 Economic and Social Development Plan in early 2016. With this plan, the government aims to maintain growth at an average rate of 5 percent between 2016 and 2020, reducing extreme poverty from 17 percent to 10 percent. To this end, the plan includes an extensive public investment program funded in part by savings accumulated during the economic boom and with new external financing. Investment areas include infrastructure, hydrocarbon exploration and thermal and hydroelectric energy generation. The plan also calls for increased private sector activity and foreign direct investment.

In light of the international context, the government’s ambitious development agenda faces structural challenges. Despite the important cushions accumulated during the economic boom, prudent management is needed to maintain macroeconomic stability. Public spending efficiency must be improved to ensure that it generates new private investments and increases the coverage and quality of public services. Consolidating the country’s position as an exporter of natural gas in the region requires joining forces with the private sector to expand proven gas reserves. It is also critical to attract investments in sectors that have been traditionally less attractive for private investors, such as mining, agriculture and manufacturing.

Last Updated: Apr 11, 2016

The World Bank Group (WBG) program in Bolivia is guided by the new 2016-2020 Country Partnership Strategy (CPS). The current portfolio of World Bank financing operations focuses mainly on transportation (35 percent), climate change, disaster risk management (25 percent) and rural and agricultural development (20 percent). Other Bank-supported areas include strengthening statistical capacity, energy, urban development, employment and social protection.

The current World Bank portfolio includes 11 active projects totaling US$966 million to support this agenda. Also under the CPS, the Bank will provide resources for new operations for up to US$2 billion during the 2016-2020 period.

The CPS has two main pillars:

  • Promote broad and inclusive growth; and
  • Support fiscal and environmental sustainability and resilience to climate change and economic shocks.

Within these two pillars, the CPS has five objectives:

  • Reduce transportation costs and increase connectivity of isolated, vulnerable communities in selected areas to the road network;
  • Increase access to certain quality basic services in low-income urban and rural communities;
  • Improve opportunities for income-generation, market access and sustainable productivity gains;
  • Strengthen the capacity for adaptation to and mitigation of climate change, reducing vulnerability to natural disasters;
  • Strengthen institutional capacity for improving public resource management and the investment climate.

The International Finance Corporation (IFC), the WBG agency that supports private sector development, is focusing on investments in the financial, agribusiness and services sectors. These investments seek to promote the development of small and medium-sized enterprises and foreign trade and to protect natural resources through the implementation of good global practices in environmental sustainability.

Last Updated: Apr 11, 2016

Productive sustainable development

The Rural Partnerships Project (PAR) supported 770 producers’ organizations in 110 rural municipalities, benefitting 29,000 rural families, whose income increased by 33 percent. Producers increased their main labor income by 67 percent and net income from productive activity in general by 49 percent. At least 90 percent of these families are indigenous.

Between 2011 and 2015, 150,000 people from 35,000 households benefitted from 800 sub-projects in 642 of the poorest rural communities in Bolivia. The sub-projects of the Community Investment in Rural Areas Project (PICAR) include irrigation canals, water uptake systems, greenhouses, latrines, livestock fences and wells.

Climate Change and Disaster Risk Management

The Emergency Recovery and Disaster Management Project (PREGD) supported post-disaster recovery with 244 infrastructure projects in municipalities with high poverty rates. The works included roads, water and basic sanitation, irrigation systems, river protection, health and education facilities damaged by El Niño and La Niña weather phenomena, benefiting over 400,000 people in more than 50 municipalities.

The World Bank supported the implementation of a reform in disaster risk management through the approval of US$200 million in financing to strengthen the country’s legal and institutional framework.

The most important preliminary contribution of the Climate Resilience Pilot Program (PPCR) is the development of the National Climate Resilience Strategy, which defines program priorities and organizes interventions into three main work areas: public policies, specific sectors and watershed management.

Human Development and Access to Basic Services

The Early Childhood Development and Assistance Project (ADEPI) implemented a quality model developed in a participatory manner in 50 percent of the 150 childcare centers in La Paz and El Alto. Between 2013 and 2016, 4,315 children up to age four benefitted from the educational materials while their mothers worked. Some 500 mothers participated in workshops to develop productive and entrepreneurial capacities as well as in workshops on sexual and reproductive health.

The Project to Reduce Health Inequality through Expansion and Access (APLIII) remodeled, expanded and equipped eight health centers in rural areas of Cochabamba, Oruro and Beni, and 20 health centers in peri-urban areas of La Paz. The Blood Cancer Center for Children, a branch of the La Paz Children’s Hospital, was opened in April 2016. This center enables the early detection of cancer in children, as well as prevention, out- and in-patient treatment of the disease and bone marrow transplants.

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

The World Bank has been supporting electrification programs in Bolivia since 2003 with operations such as the Decentralized Infrastructure Project for the Transformation of Rural Areas (IDTR II), which brought electricity to nearly 30,300 families (connected to the electric power grid and household solar panels), 110 schools and 14 health centers between 2006 and 2011. The Decentralized Electricity Project for Universal Access (GPOBA) provided electricity for nearly 7,600 households, 136 schools and 5,700 pico lamps with household solar systems during 2010-2012, benefitting 222,800 people.

Support to Public Sector Efficiency

The Project to Strengthen Statistics Capacity and the Information Base for Evidence-based Planning (STATCAP) 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 financed actions to improve poverty measurement, including the preparation of new poverty maps and the definition of multidimensional indicators for the Living Well Index. 

Last Updated: Apr 11, 2016


LENDING

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

*Amounts include IBRD and IDA commitments