Press Release: IMF Completes Second Review of Bolivia's Stand-By Arrangement, Approves US$15 Million Disbursement
October 6, 2003
The Executive Board of the International Monetary Fund (IMF) today completed the second review of Bolivia's performance under a one-year, SDR 85.75 million (about US$123 million) Stand-By Arrangement that was approved on April 2, 2003 (see Press Release No. 03/46). This decision enables the release of SDR 10.7 million (about US$15 million) to Bolivia, which brings total disbursements under the program to SDR 64.2 million (about US$92 million).
The Executive Board also approved Bolivia's request for the modification of performance criteria for end-September with respect to the fiscal deficit, net domestic financing of the public sector, central bank net credit to the non-financial public sector, and net domestic assets of the central bank, as well as the modification of performance criteria for end-December in relation to the fiscal deficit and net domestic financing of the public sector. The Executive Board also approved Bolivia's request for waivers of applicability until October 30, 2003 of the performance criteria for end-September, for which data was not available.
Following the Executive Board discussion on Bolivia, Anne Krueger, First Deputy Managing Director and Acting Chair, said:
"Bolivia's economic program is broadly on track. Despite a difficult political and social environment, inflation remains low and indications are that economic growth is picking up and that financial market conditions have stabilized. Although the fiscal outturn has fallen short of the program's objectives, the authorities have taken corrective measures. Moreover, encouraging progress has been made with the government's reform agenda.
"The authorities' corrective steps to contain the fiscal deficit in 2003 and to facilitate continued fiscal consolidation in 2004 and beyond will require firm and consistent implementation to achieve higher economic growth and lasting poverty reduction. Recent measures that will be of crucial importance in this context include reductions in low-priority spending, and the implementation of legislation to introduce a new tax code, broaden the tax base, and apply a tax regularization scheme.
"The recent approval of the out-of-court workout law and the issuing of the supporting regulations represent important steps that will help to put in place an appropriate framework for corporate and financial restructuring. The law will now be applied to a pilot sample of firms. The authorities also intend to develop an action plan to improve the resiliency of the banking system and address any potential weaknesses, and to implement recommendations made by the recent Financial Sector Assessment Program study.
"Building on recent policy initiatives and progress toward stabilizing the economy, the authorities are working to put in place a strong policy framework for the next three years that will incorporate comprehensive reforms aimed at strengthening the basis for sustained growth and poverty reduction. The Fund is working closely with the authorities, who plan to develop and implement the program on the basis of a broad dialogue with domestic stakeholders and discussion with the donor community. On this basis, the authorities have reiterated their intention to seek support under the IMF's Poverty Reduction and Growth Facility before the end of the year," Ms. Krueger stated.