Public Investment in Bolivia: Prospects and Implications
IMF Working Papers, July 12, 2019
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Bibliographic details
- Authors: Yehenew Endegnanew, Dawit Tessema
- Published: July 12, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498319317.001
Summary and Context
- Authors: Yehenew Endegnanew, Dawit Tessema
- Publication date: July 12, 2019
- Context: Bolivia’s “Patriotic Agenda 2025” and a five-year development plan (2016–2020) emphasize state-led industrialization supported by large-scale public investment to fill infrastructure gaps and raise productivity for sustained medium-term growth.
Main findings
- Large-scale public investment has aimed to fill infrastructure gaps and raise productivity to ensure sustained medium-term growth.
- Pursuit of these public investment goals in a period of lower hydrocarbon revenues has contributed to widening fiscal and external current account deficits.
- The paper uses a structural model to outline different scenarios for the level of public investment in the face of declining hydrocarbon revenues.
- Key result: If public investment is sustained at current levels as a share of GDP while hydrocarbon revenues continue to decline, the sustainability of the public debt could be called into question.
Scenarios and analytical approach
- Methodology: Structural model scenarios comparing alternative public investment paths under declining hydrocarbon revenues.
- Scenario implication highlighted: Sustaining public investment at current shares of GDP amid continued declines in hydrocarbon revenues risks public debt sustainability.
Policy implications and considerations
- Balancing public investment objectives with fiscal and external sustainability is central given declining hydrocarbon revenues.
- Implicit policy trade-off: Maintaining high public investment to meet development targets versus the risk of deteriorating public debt metrics and widening deficits.
Key topics and keywords
- Subject areas: Economic sectors, Expenditure, National accounts, Natural gas sector, Private consumption, Private investment, Public debt, Public investment spending
- Keywords: consolidation path, deficit, Fiscal Consolidation, GDP, Global, hydrocarbon revenue projection, investment, investment path, investment-growth nexus, Natural gas sector, Private consumption, Private investment, Public Investment, Public investment spending, WP
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- Working Paper