IMF Executive Board Approves US$327 Million in Emergency Support to Bolivia to Address the COVID-19 Pandemic

IMF News, April 17, 2020

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Canonical URL: IMF Executive Board Approves US$327 Million in Emergency Support to Bolivia to Address the COVID-19 Pandemic

Date: April 17, 2020
The IMF approved Bolivia’s request for emergency financial assistance of about US$327 million under the Rapid Financing Instrument (RFI).
Equivalent amounts: SDR 240.1 million, 100 percent of quota.
Purpose: to help meet Bolivia’s balance of payments need stemming from the outbreak of the COVID-19 pandemic and to support urgently required medical spending and relief measures to protect the well-being of the population.

The COVID-19 pandemic will have a severe impact on Bolivia.
Key channels of economic impact identified:
- Lower global energy prices.
- Domestic quarantines.
- A sudden stop in capital inflows.
Expected outcomes from these channels:
- Sharp reductions in exports.
- Reductions in production.
- Reductions in fiscal revenues.

Bolivia’s response described as timely, well-targeted, and appropriate.
Specific actions taken by the authorities:
- Strengthened the ability of the country’s health care system to confront the crisis.
- Quickly adopted social spending measures to support affected firms and households, particularly the most vulnerable.
- The central bank took steps to ensure continued liquidity and to mitigate the economic impact of the pandemic.
Authorities’ commitments:
- Determination to ensure macroeconomic stability and debt sustainability once the crisis has passed.
- Commitment to reach a sustainable fiscal deficit in the medium term while continuing to maintain strong support for social spending.
- Commitment to adopt other macro and financial measures as needed.

The IMF’s emergency assistance under the RFI is intended to:
- Support medical spending and relief measures.
- Address balance of payments needs.
The IMF emphasized that additional support from other development partners will be critical to help address Bolivia’s fiscal and balance of payments needs.

“The COVID-19 pandemic will have a severe impact on Bolivia. The economic cost will be substantial, as the combination of lower global energy prices, domestic quarantines, and a sudden stop in capital inflows leads to sharp reductions in exports, production, and fiscal revenues. The IMF’s emergency assistance under the Rapid Financing Instrument will help to support urgently required medical spending and relief measures, while addressing the country’s balance of payments needs.
“Bolivia’s response to the pandemic has been timely, well-targeted, and appropriate. The authorities have acted to strengthen the ability of the country’s health care system to confront the crisis and have quickly adopted social spending measures to support affected firms and households, particularly the most vulnerable. The central bank has taken steps to ensure continued liquidity and to mitigate the economic impact of the pandemic.
“The authorities have expressed their determination to ensure macroeconomic stability and debt sustainability once the crisis has passed. To this end, they are committed to reaching a sustainable fiscal deficit in the medium term, while continuing to maintain strong support for social spending, and to adopt other macro and financial measures as needed.
“Additional support from other development partners will also be critical to help address Bolivia’s fiscal and balance of payments needs.”

IMF press release: Press Release No. 20/170 — April 17, 2020.