IMF Staff Country Reports

The 2025 Article IV Consultation discusses that Bolivia's real gross domestic product growth has moderated to 2.1 percent in the first three quarters of 2024, driven by a decline in hydrocarbons production, a slowdown in services activity, and a drop in soy crops and related manufacturing due to “El Niño” effects. The macro-economic outlook under current policies is unsustainable, and the risks of a balance of payments and fiscal crisis are rising. Usable foreign exchange reserves are expected to remain close to zero—even if the central bank is able to liquefy its remaining gold reserves through collateralized borrowing, as envisaged in the 2025 budget—and a range of potential external or domestic shocks could trigger capital outflows, a faster depreciation of the parallel exchange rate, higher inflation, reduced growth and, ultimately, a disorderly adjustment. At the core of any policy plan must be a credible, multi-year fiscal consolidation. This will require a phase out of fuel subsidies, a lower wage bill, and a rationalization of capital spending. Urgent efforts are needed to remove supply-side constraints to growth, lessen informality, strengthen governance and regulatory frameworks, improve public investment management, and foster competitiveness.