{
  "title": "Press Release: IMF Executive Board Concludes 2013 Article IV Consultation with Bolivia",
  "publication": "IMF News, February 10, 2014",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr1445",
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  "summary": "On January 27, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Bolivia.",
  "publishDate": "2014-02-10",
  "sections": [
    {
      "heading": "Overview",
      "content": "- On January 27, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Bolivia.\n- Good macroeconomic performance and active social policies since the mid-2000s helped Bolivia nearly triple income per capita and reduce poverty.\n- Recent support came from high international commodity prices and rising volumes of natural gas exports.\n- Twin surpluses in the fiscal and external accounts led net international reserves to increase to almost 50 percent of gross domestic product (GDP)."
    },
    {
      "heading": "Macroeconomic performance and outlook",
      "content": "- Real GDP growth is projected at 6.7 percent in 2013, the highest growth rate of the last thirty years.\n- Growth drivers: soaring hydrocarbon exports, strong private consumption, and accommodative macroeconomic policies.\n- Growth is projected to remain above potential in 2014, sustained by hydrocarbon exports and a moderate fiscal impulse.\n- External current account surplus: expected to narrow in 2013 and over the medium term due to softer terms of trade."
    },
    {
      "heading": "Inflation and monetary policy",
      "content": "- Food supply shocks triggered an increase in inflation in mid-2013.\n- Authorities responded with rapid monetary tightening and measures to improve food supply.\n- Staff projects inflation to fall to 5.5 percent by the end of 2014, contingent on anchoring inflation expectations; further tightening may be needed if inflationary pressures prove persistent.\n- Executive Directors commended the authorities’ response and generally agreed that further monetary tightening could be needed if second-round effects persist.\n- Directors recommended discontinuing central bank lending to public enterprises and noted that a savings fund established in line with international best practices could help channel such lending.\n- Directors saw merit in gradually allowing greater exchange rate flexibility to help absorb external shocks."
    },
    {
      "heading": "Fiscal stance and public debt",
      "content": "- Fiscal stance expected to remain expansionary with important investment projects to industrialize the resource sector in the pipeline.\n- Overall fiscal surplus projected to narrow to 0.6 percent of GDP in 2013 and turn to an overall deficit of 0.4 percent of GDP in 2014.\n- Gross public debt expected to continue downward to 32.5 percent of GDP by end-2013, from 40 percent of GDP in 2009.\n- Directors encouraged avoiding a pro-cyclical fiscal stimulus and saving budgetary resources to respond to adverse external shocks.\n- Measures to improve the non-hydrocarbon fiscal balance suggested: better targeting fuel subsidies, enhancing efficiency of public investment and social transfers, and implementing tax administration reforms.\n- Directors encouraged adoption of a medium-term fiscal framework to manage resource wealth, balancing intergenerational equity against immediate development needs."
    },
    {
      "heading": "External sector and reserves",
      "content": "- Net international reserves increased to almost 50 percent of GDP, providing ample buffers against external shocks.\n- Gross international reserves (in millions of U.S. dollars): 8,580 (2009), 9,730 (2010), 12,019 (2011), 13,927 (2012), 14,534 (2013), 16,089 (2014).\n- Directors noted the external position: merchandise export and natural gas remain significant shares of GDP, but terms of trade softness expected to narrow the current account surplus."
    },
    {
      "heading": "Financial sector and the Financial Services Law",
      "content": "- Bolivian financial system remains solid and well capitalized.\n- The new Financial Services Law could significantly alter the financial landscape.\n- Law features include:\n  - provisions to regulate lending rates and set minimum lending quotas for the productive sector and social housing;\n  - discretion to set floors on deposit rates;\n  - mechanisms to enhance consumer protection and financial access in rural areas.\n- Directors stressed the need to continue to strengthen supervision, and recommended less distortionary instruments to promote financial inclusion.\n- Directors welcomed Bolivia’s strengthened framework against money laundering and terrorist financing and urged its implementation."
    },
    {
      "heading": "Social policy, poverty reduction, and structural recommendations",
      "content": "- Social policies pursued ambitious redistributive and poverty reduction goals, increasing living standards of vulnerable households.\n- Directors commended authorities’ progress in reducing poverty and called for continued efforts grounded in a comprehensive evaluation of existing programs.\n- Directors emphasized broadening the economic base and raising productivity in light of changing world hydrocarbon markets.\n- Recommendations to support private sector activity and growth: improve the business climate, create a predictable legal framework, and increase investment in infrastructure and human capital."
    },
    {
      "heading": "Executive Board assessment and policy recommendations (summary)",
      "content": "- Directors welcomed strong economic performance in 2013 and noted a favorable near-term outlook, while encouraging action on vulnerabilities and policy frameworks.\n- Recommended macro stance: neutral, avoid pro-cyclical fiscal stimulus, save for adverse shocks.\n- Fiscal reforms suggested: target fuel subsidies, improve public investment and social transfer efficiency, tax administration reforms, and adopt a medium-term fiscal framework.\n- Monetary policy: be prepared for further tightening if inflation proves persistent; end central bank lending to public enterprises; consider a savings fund for such lending.\n- Financial sector: strengthen supervision; use less distortionary tools for financial inclusion; implement anti–money laundering/terrorist financing framework.\n- Structural reforms: broaden the economic base, raise productivity, improve business climate, and invest in infrastructure and human capital."
    },
    {
      "heading": "Selected economic indicators (highlights)",
      "content": "- Real GDP (annual percentage changes): 3.4 (2009), 4.1 (2010), 5.2 (2011), 6.7 (2012), 5.4 (2013), GDP deflator: -2.4 (2009), 8.8 (2010), 14.6 (2011), 6.9 (2012), 2.5 (2013), 6.0 (2014).\n- CPI inflation (period average): 3.3 (2009), 9.9 (2010), 4.5 (2011), 5.7 (2012), 6.8 (2013).\n- CPI inflation (end-of-period): 0.3 (2009), 7.2 (2010), 6.5 (2011), 5.5 (2012).\n- Combined public sector—Revenues and grants (percent of GDP): 35.8 (2009), 33.2 (2010), 36.2 (2011), 37.9 (2012), 38.6 (2013), 37.3 (2014).\n- Hydrocarbon related revenue (percent of GDP): 11.3 (2009), 10.2 (2010), 11.4 (2011), 13.0 (2012), 13.1 (2013), 12.2 (2014).\n- Expenditure (percent of GDP): 31.5 (2009), 35.4 (2010), 36.1 (2011), 38.0 (2012), 37.7 (2013).\n- Overall balance (percent of GDP): 0.0 (2009), 1.7 (2010), 0.8 (2011), 1.8 (2012), 0.6 (2013), -0.4 (2014).\n- Total gross public debt (percent of GDP): 40.0 (2009), 38.5 (2010), 34.7 (2011), 33.4 (2012), 32.5 (2013), 29.7 (2014).\n- Current account (percent of GDP): 4.3 (2009), 3.9 (2010), 7.8 (2011), 4.0 (2012), 3.1 (2013).\n- Merchandise export (percent of GDP): 28.4 (2009), 32.4 (2010), 41.3 (2011), 39.1 (2012), 38.2 (2013).\n- Natural gas (percent of GDP): 14.1 (2009), 16.1 (2010), 20.1 (2011), 18.4 (2012), 16.7 (2013).\n- Merchandise imports (percent of GDP): 26.0 (2009), 28.3 (2010), 32.9 (2011), 30.4 (2012), 31.0 (2013), 31.7 (2014).\n- Gross international reserves (millions of U.S. dollars): 8,580 (2009), 9,730 (2010), 12,019 (2011), 13,927 (2012), 14,534 (2013), 16,089 (2014).\n- Gross international reserves (percent of broad money): 79.8 (2009), 80.0 (2010), 83.0 (2011), 71.3 (2012), 68.0 (2013).\n- Money and credit—NFA of the banking system (changes in percent of broad money at the beginning of the period): 18.8 (2009), 8.2 (2010), 14.7 (2011), 13.5 (2012), 16.2 (2013), 10.8 (2014).\n- NDA of the banking system (changes in percent of broad money): 1.4 (2009), 1.6 (2010), 4.4 (2011), 1.0 (2012), 5.1 (2013).\n- Credit to the private sector (percent of broad money): 34.0 (2009), 36.0 (2010), 36.8 (2011), 39.0 (2012), 42.1 (2013), 42.5 (2014).\n- Broad money (changes in percent): 19.7 (2009), 12.5 (2010), 17.7 (2011), 20.2 (2012), 17.2 (2013), 15.9 (2014).\n- Interest rates (percent, end-of-period)—Deposits in local currency: 2.1 (2009), 0.9 (2010), 1.2 (2011). Loans in local currency: 9.1 (2009), 10.4 (2010), 10.6 (2011).\n\nPress Release No. 14/45; February 10, 2014. IMF COMMUNICATIONS DEPARTMENT.\n\n---\n\n\n References\n\n- Bolivia and the IMF\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr1445"
    }
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    "Published: February 10, 2014",
    "On January 27, 2014, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Bolivia.",
    "Good macroeconomic performance and active social policies since the mid-2000s helped Bolivia nearly triple income per capita and reduce poverty.",
    "Recent support came from high international commodity prices and rising volumes of natural gas exports.",
    "Twin surpluses in the fiscal and external accounts led net international reserves to increase to almost 50 percent of gross domestic product (GDP).",
    "Real GDP growth is projected at 6.7 percent in 2013, the highest growth rate of the last thirty years.",
    "Growth drivers: soaring hydrocarbon exports, strong private consumption, and accommodative macroeconomic policies.",
    "Growth is projected to remain above potential in 2014, sustained by hydrocarbon exports and a moderate fiscal impulse.",
    "External current account surplus: expected to narrow in 2013 and over the medium term due to softer terms of trade.",
    "Food supply shocks triggered an increase in inflation in mid-2013.",
    "Authorities responded with rapid monetary tightening and measures to improve food supply.",
    "Staff projects inflation to fall to 5.5 percent by the end of 2014, contingent on anchoring inflation expectations; further tightening may be needed if inflationary pressures prove persistent.",
    "Executive Directors commended the authorities’ response and generally agreed that further monetary tightening could be needed if second-round effects persist.",
    "Directors recommended discontinuing central bank lending to public enterprises and noted that a savings fund established in line with international best practices could help channel such lending.",
    "Directors saw merit in gradually allowing greater exchange rate flexibility to help absorb external shocks.",
    "Fiscal stance expected to remain expansionary with important investment projects to industrialize the resource sector in the pipeline.",
    "Overall fiscal surplus projected to narrow to 0.6 percent of GDP in 2013 and turn to an overall deficit of 0.4 percent of GDP in 2014.",
    "Gross public debt expected to continue downward to 32.5 percent of GDP by end-2013, from 40 percent of GDP in 2009.",
    "Directors encouraged avoiding a pro-cyclical fiscal stimulus and saving budgetary resources to respond to adverse external shocks.",
    "Measures to improve the non-hydrocarbon fiscal balance suggested: better targeting fuel subsidies, enhancing efficiency of public investment and social transfers, and implementing tax administration reforms.",
    "Directors encouraged adoption of a medium-term fiscal framework to manage resource wealth, balancing intergenerational equity against immediate development needs.",
    "Net international reserves increased to almost 50 percent of GDP, providing ample buffers against external shocks.",
    "Gross international reserves (in millions of U.S. dollars): 8,580 (2009), 9,730 (2010), 12,019 (2011), 13,927 (2012), 14,534 (2013), 16,089 (2014).",
    "Directors noted the external position: merchandise export and natural gas remain significant shares of GDP, but terms of trade softness expected to narrow the current account surplus.",
    "Bolivian financial system remains solid and well capitalized.",
    "The new Financial Services Law could significantly alter the financial landscape.",
    "Law features include:",
    "Directors stressed the need to continue to strengthen supervision, and recommended less distortionary instruments to promote financial inclusion.",
    "Directors welcomed Bolivia’s strengthened framework against money laundering and terrorist financing and urged its implementation.",
    "Social policies pursued ambitious redistributive and poverty reduction goals, increasing living standards of vulnerable households.",
    "Directors commended authorities’ progress in reducing poverty and called for continued efforts grounded in a comprehensive evaluation of existing programs.",
    "Directors emphasized broadening the economic base and raising productivity in light of changing world hydrocarbon markets.",
    "Recommendations to support private sector activity and growth: improve the business climate, create a predictable legal framework, and increase investment in infrastructure and human capital.",
    "Directors welcomed strong economic performance in 2013 and noted a favorable near-term outlook, while encouraging action on vulnerabilities and policy frameworks.",
    "Recommended macro stance: neutral, avoid pro-cyclical fiscal stimulus, save for adverse shocks.",
    "Fiscal reforms suggested: target fuel subsidies, improve public investment and social transfer efficiency, tax administration reforms, and adopt a medium-term fiscal framework.",
    "Monetary policy: be prepared for further tightening if inflation proves persistent; end central bank lending to public enterprises; consider a savings fund for such lending.",
    "Financial sector: strengthen supervision; use less distortionary tools for financial inclusion; implement anti–money laundering/terrorist financing framework.",
    "Structural reforms: broaden the economic base, raise productivity, improve business climate, and invest in infrastructure and human capital.",
    "Real GDP (annual percentage changes): 3.4 (2009), 4.1 (2010), 5.2 (2011), 6.7 (2012), 5.4 (2013), GDP deflator: -2.4 (2009), 8.8 (2010), 14.6 (2011), 6.9 (2012), 2.5 (2013), 6.0 (2014).",
    "CPI inflation (period average): 3.3 (2009), 9.9 (2010), 4.5 (2011), 5.7 (2012), 6.8 (2013).",
    "CPI inflation (end-of-period): 0.3 (2009), 7.2 (2010), 6.5 (2011), 5.5 (2012).",
    "Combined public sector—Revenues and grants (percent of GDP): 35.8 (2009), 33.2 (2010), 36.2 (2011), 37.9 (2012), 38.6 (2013), 37.3 (2014).",
    "Hydrocarbon related revenue (percent of GDP): 11.3 (2009), 10.2 (2010), 11.4 (2011), 13.0 (2012), 13.1 (2013), 12.2 (2014).",
    "Expenditure (percent of GDP): 31.5 (2009), 35.4 (2010), 36.1 (2011), 38.0 (2012), 37.7 (2013).",
    "Overall balance (percent of GDP): 0.0 (2009), 1.7 (2010), 0.8 (2011), 1.8 (2012), 0.6 (2013), -0.4 (2014).",
    "Total gross public debt (percent of GDP): 40.0 (2009), 38.5 (2010), 34.7 (2011), 33.4 (2012), 32.5 (2013), 29.7 (2014).",
    "Current account (percent of GDP): 4.3 (2009), 3.9 (2010), 7.8 (2011), 4.0 (2012), 3.1 (2013).",
    "Merchandise export (percent of GDP): 28.4 (2009), 32.4 (2010), 41.3 (2011), 39.1 (2012), 38.2 (2013).",
    "Natural gas (percent of GDP): 14.1 (2009), 16.1 (2010), 20.1 (2011), 18.4 (2012), 16.7 (2013).",
    "Merchandise imports (percent of GDP): 26.0 (2009), 28.3 (2010), 32.9 (2011), 30.4 (2012), 31.0 (2013), 31.7 (2014).",
    "Gross international reserves (millions of U.S. dollars): 8,580 (2009), 9,730 (2010), 12,019 (2011), 13,927 (2012), 14,534 (2013), 16,089 (2014).",
    "Gross international reserves (percent of broad money): 79.8 (2009), 80.0 (2010), 83.0 (2011), 71.3 (2012), 68.0 (2013).",
    "Money and credit—NFA of the banking system (changes in percent of broad money at the beginning of the period): 18.8 (2009), 8.2 (2010), 14.7 (2011), 13.5 (2012), 16.2 (2013), 10.8 (2014).",
    "NDA of the banking system (changes in percent of broad money): 1.4 (2009), 1.6 (2010), 4.4 (2011), 1.0 (2012), 5.1 (2013).",
    "Credit to the private sector (percent of broad money): 34.0 (2009), 36.0 (2010), 36.8 (2011), 39.0 (2012), 42.1 (2013), 42.5 (2014).",
    "Broad money (changes in percent): 19.7 (2009), 12.5 (2010), 17.7 (2011), 20.2 (2012), 17.2 (2013), 15.9 (2014).",
    "Interest rates (percent, end-of-period)—Deposits in local currency: 2.1 (2009), 0.9 (2010), 1.2 (2011). Loans in local currency: 9.1 (2009), 10.4 (2010), 10.6 (2011).",
    "[Bolivia and the IMF](http://www.imf.org/external/country/BOL/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](https://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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