{
  "title": "Press Release: IMF Approves Three-Year Arrangement Under the ESAF for Bolivia",
  "publication": "IMF News, September 18, 1998",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9841",
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  "summary": "The IMF approved a three-year loan under the Enhanced Structural Adjustment Facility (ESAF) equivalent to SDR 100.96 million (about US$138 million) to support Bolivia’s economic program for 1998–2001.",
  "publishDate": "1998-09-18",
  "sections": [
    {
      "heading": "Approval and financing",
      "content": "- The IMF approved a three-year loan under the Enhanced Structural Adjustment Facility (ESAF) equivalent to SDR 100.96 million (about US$138 million) to support Bolivia’s economic program for 1998–2001.\n- The first annual loan is SDR 33.65 million (about US$46 million), to be disbursed in two equal semiannual installments; the first installment is available immediately.\n- The Executive Board agreed that Bolivia has met the requirements for receiving from the IMF US$29 million out of a total package of US$448 million in debt relief from its official external creditors, under the Initiative for Heavily Indebted Poor Countries (HIPC)."
    },
    {
      "heading": "Background and recent performance",
      "content": "- Bolivia experienced hyperinflation in 1984–85 and a 10 percent cumulative decline in real GDP in 1980–85; four successive governments carried out a reform strategy since 1985.\n- By 1997:\n  - Twelve-month inflation had fallen from a peak of 23,500 percent in September 1985 to 18 percent in December 1990, and to less than 7 percent by end-1997.\n  - Economic activity rose at 4.2 percent in 1997.\n  - External debt burden had improved and international reserves had reached reasonably comfortable levels."
    },
    {
      "heading": "Medium-term strategy (1998–2001) — objectives and projections",
      "content": "- Growth:\n  - Economic growth under the program should increase from 4.5-5 percent in 1998 to 5.5-6 percent by 2000.\n- Reserves and inflation:\n  - Gross international reserves should remain at about 6½ month of imports.\n  - Inflation should decline to 6 percent in 1999 and 5.5 percent in 2000.\n- Fiscal balances:\n  - Combined public sector deficit is expected to rise to 4.1 percent of GDP in 1998 due to structural reform costs and unexpected temporary expenditures for disaster relief.\n  - The deficit should decline to 3.6 percent of GDP in 1999 and 2 percent of GDP by 2002.\n  - The nonpension fiscal balance should benefit from improved tax administration and expenditure restraint.\n- External current account:\n  - Projected to remain above 8 percent of GDP in 1998, then decline to 7 percent in 1999 and 4 percent in 2002, reflecting a surge in foreign direct investment in the export sector."
    },
    {
      "heading": "Structural reforms — priorities and actions",
      "content": "- Core emphasis: structural reform with new focus on social expenditure, fiscal decentralization, and governance.\n- Financial sector: complete reform to create full confidence in the financial system.\n- Privatization: government plans to privatize all remaining public enterprises, including those owned by the armed forces; priority to privatize state oil company YPFB’s refineries by June 1999.\n- Markets and labor:\n  - Deepen domestic capital markets.\n  - Make labor markets more flexible through changes in the labor law that eliminate disincentives to employment in the formal sector; national dialogue with business, labor, and political groups has begun.\n- Governance improvements:\n  - Establish three legal institutions—the Judicial Council, the Ombudsman, and the Constitutional Court.\n  - Implement a comprehensive customs reform."
    },
    {
      "heading": "Addressing social needs",
      "content": "- HIPC: Government observed the social policy targets monitored under the HIPC initiative and intends to adhere to the target established through 2000.\n- Education:\n  - Increase responsibility of local governments for education.\n  - Reward good teaching through a merit pay system.\n  - Rehabilitate schools and ensure an adequate supply of learning materials.\n- Health:\n  - Increased spending on basic health care included in the government’s five-year national plan.\n  - Contemplates expanded access to primary and preventive care for the poor and improved coordination across different levels of government."
    },
    {
      "heading": "The challenge ahead",
      "content": "- Recent surge in investment, financed in important part by foreign direct investment, suggests improving growth prospects.\n- Crucial to ensure a greater share of investment is financed by national savings to keep the external current account deficit on a sustainable path."
    },
    {
      "heading": "Key institutional and IMF-related facts",
      "content": "- Bolivia joined the IMF on December 27, 1945; its quota is SDR 126.2 million (about US$173 million).\n- Bolivia’s outstanding use of IMF credits totals SDR 181 (about US$248 million).\n- ESAF terms (as described in the release):\n  - ESAF loans carry an interest rate of 0.5 percent a year and are repayable over 10 years, with a 5½-year grace period.\n- HIPC Initiative (as described in the release):\n  - Entails coordinated action to reduce to sustainable levels the external debt burden of heavily indebted poor countries which pursue IMF- and World Bank-supported adjustment and reform programs."
    },
    {
      "heading": "Selected economic indicators (exact figures from the release)",
      "content": "- Income and Prices (annual percentage change)\n  - Real GDP: 1994: 4.7; 1995: 4.1; 1996: 4.2; 1997: (not listed for 1997 in this row)\n  - Real domestic demand: 1994: 0.9; 1995: 4.6; 1996: 4.9; 1997: 7.1; 1998: 6.6\n  - CPI inflation (end-of-period): 1994: 8.5; 1995: 12.6; 1996: 8.0; 1997: 6.7; 1998: 6.5\n- Investment and savings (percent of GDP)\n  - Total investment: 1994: 14.9; 1995: 15.6; 1996: 16.5; 1997: 18.7; 1998: 18.8\n  - Gross national savings: 1994: 11.2; 1995: 10.6; 1996: 11.3; 1997: 10.5; 1998: (not listed)\n- Combined public sector (percent of GDP)\n  - Overall balance: 1994: -3.0; 1995: -1.8; 1996: -1.9; 1997: -3.3; 1998: -4.1\n  - Foreign financing: 1994: 3.7; 1995: 3.6; 1996: 2.5; 1997: 2.7; 1998: 2.6\n  - Domestic financing: 1994: -0.7; 1995: -0.6; 1996: 0.5; 1997: 1.5; 1998: (not listed)\n- Money and credit (annual percentage change, unless otherwise stated)\n  - M3: 1994: 21.6; 1995: 9.5; 1996: 24.9; 1997: 17.1; 1998: 14.5\n  - Credit to private sector: 1994: 24.0; 1995: 13.6; 1996: 21.1; 1997: 14.3; 1998: (not listed)\n- External sector\n  - Current account balance (US$ million): 1994: -219; 1995: -335; 1996: -385; 1997: -647; 1998: -702\n  - Current account (percent of GDP): 1994: -3.7; 1995: -5.0; 1996: -5.1; 1997: -8.1; 1998: -8.2\n  - Of which: trade balance (US$ million): 1994: -279; 1995: -301; 1996: -447; 1997: -684; 1998: -721\n  - Capital account balance (US$ million): 1994: 208; 1995: 257; 1996: 727; 1997: 750; 1998: 677\n  - Of which: Foreign direct investment (US$ million): 1994: 90; 1995: 177; 1996: 426; 1997: 591; 1998: 623\n  - Gross official reserves (months of imports): 1994: 5.7; 1995: 5.6; 1996: 7.3; 1997: 7.5; 1998: 6.8\n  - Public sector external debt (US$ billion): 1994: 4.8; 1995: 4.5; 1996: 4.3; 1997: (not listed); 1998: (not listed)\n  - Debt service ratio (percent of exports of goods and non-factor services, after HIPC assistance): 1994: 35.3; 1995: 42.2; 1996: 25.6; 1997: 26.1; 1998: 23.0\n\nPress Release No. 98/41. September 18, 1998. International Monetary Fund.\n\n---\n\n\n References\n\n- Bolivia and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr9841"
    }
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    "Published: September 18, 1998",
    "The IMF approved a three-year loan under the Enhanced Structural Adjustment Facility (ESAF) equivalent to SDR 100.96 million (about US$138 million) to support Bolivia’s economic program for 1998–2001.",
    "The first annual loan is SDR 33.65 million (about US$46 million), to be disbursed in two equal semiannual installments; the first installment is available immediately.",
    "The Executive Board agreed that Bolivia has met the requirements for receiving from the IMF US$29 million out of a total package of US$448 million in debt relief from its official external creditors, under the Initiative for Heavily Indebted Poor Countries (HIPC).",
    "Bolivia experienced hyperinflation in 1984–85 and a 10 percent cumulative decline in real GDP in 1980–85; four successive governments carried out a reform strategy since 1985.",
    "By 1997:",
    "Growth:",
    "Reserves and inflation:",
    "Fiscal balances:",
    "External current account:",
    "Core emphasis: structural reform with new focus on social expenditure, fiscal decentralization, and governance.",
    "Financial sector: complete reform to create full confidence in the financial system.",
    "Privatization: government plans to privatize all remaining public enterprises, including those owned by the armed forces; priority to privatize state oil company YPFB’s refineries by June 1999.",
    "Markets and labor:",
    "Governance improvements:",
    "HIPC: Government observed the social policy targets monitored under the HIPC initiative and intends to adhere to the target established through 2000.",
    "Education:",
    "Health:",
    "Recent surge in investment, financed in important part by foreign direct investment, suggests improving growth prospects.",
    "Crucial to ensure a greater share of investment is financed by national savings to keep the external current account deficit on a sustainable path.",
    "Bolivia joined the IMF on December 27, 1945; its quota is SDR 126.2 million (about US$173 million).",
    "Bolivia’s outstanding use of IMF credits totals SDR 181 (about US$248 million).",
    "ESAF terms (as described in the release):",
    "HIPC Initiative (as described in the release):",
    "Income and Prices (annual percentage change)",
    "Investment and savings (percent of GDP)",
    "Combined public sector (percent of GDP)",
    "Money and credit (annual percentage change, unless otherwise stated)",
    "External sector",
    "[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/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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