{
  "title": "IMF Executive Board Concludes 2018 Article IV Consultation with Bolivia",
  "publication": "IMF News, December 6, 2018",
  "sourceUrl": "https://www.imf.org/en/news/articles/2018/12/06/pr18453-imf-executive-board-concludes-2018-article-iv-consultation-with-bolivia",
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  "summary": "I. Social and Demographic Indicators - GDP per capita (U.S. dollars, 2017): 3,382 - Poverty headcount ratio (percent of population, 2016): 39.5 - Population (millions, 2017): 11.2 - Gini index (2016): 44.6 - Life expectancy at birth (years, 2015): 69 - Adult literacy rate (percent, 2015): 92.5 - Mor",
  "publishDate": "2018-12-06",
  "sections": [
    {
      "heading": "Background and recent performance",
      "content": "- On November 9, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Bolivia.\n- Bolivia registered annual real GDP growth of 4.8 percent on average between 2004–17.\n- The share of the population living in extreme poverty fell by half to 17 percent.\n- Since the commodity price drop in 2014, authorities conducted accommodative fiscal and credit policies that maintained robust growth but resulted in:\n  - large fiscal and external current account deficits,\n  - reserve losses,\n  - a sharp increase in public debt.\n- External competitiveness was negatively affected by the appreciating US dollar and high wage growth in the context of a stabilized exchange rate."
    },
    {
      "heading": "Growth outlook and projections",
      "content": "- Real GDP growth is projected at 4.5 percent in 2018.\n- Growth is forecast to moderate to 3.7 percent in the medium-term.\n- Drivers and assumptions:\n  - Continued accommodative policies, a second economy-wide wage bonus, and strong agriculture output support near-term growth.\n  - Limited impulse from macro policies and lower total factor productivity in the post-commodity boom period underpin the medium-term moderation.\n  - Government decision to limit the growth of public investment expected to help reduce the fiscal deficit over time and slow growth in public debt.\n  - External current account deficit expected to narrow slowly owing to moderation in imports of capital goods.\n  - Capital inflows and remittances expected to be weaker, with international reserves forecast to decline slowly, falling below the Fund’s reserve adequacy metric by 2020."
    },
    {
      "heading": "Fiscal and external sector assessments",
      "content": "- Executive Directors welcomed containment of public investment as helpful to reduce the fiscal deficit over the medium term but noted:\n  - The current large fiscal deficit and loss of foreign reserves warrant further policy tightening to restore external balance and limit vulnerabilities.\n  - Fiscal adjustment should come more from the spending side.\n  - Recommendation to implement a medium‑term fiscal framework anchored by a debt target to guide fiscal policy.\n- Directors recommended ensuring social schemes are directed to the most vulnerable groups.\n- External sector notes:\n  - Main risks include political uncertainty surrounding the 2019 elections, failure to lower public investment as envisaged, and commodity-related shocks, including failure to discover new natural gas fields."
    },
    {
      "heading": "Monetary policy and financial sector",
      "content": "- Directors agreed monetary policy should focus primarily on price stability and preserving the nominal exchange rate anchor.\n- Observations and recommendations:\n  - Strong credit growth and central bank lending to state‑owned enterprises contributed to pressure on international reserves.\n  - Advice to normalize monetary conditions as inflation pressures resume.\n  - Encouraged strengthening the independence of the central bank.\n  - Called for steps to cease direct lending by the central bank to state‑owned enterprises.\n  - Banking sector remains broadly stable.\n  - Encouraged removal of credit quotas and interest rate caps to limit build‑up of vulnerabilities and ensure lending decisions better reflect intrinsic risks."
    },
    {
      "heading": "Structural reforms and governance",
      "content": "- Directors emphasized accelerating structural reforms to strengthen productivity, competitiveness, and support diverse and broad‑based growth.\n- Policy recommendations include:\n  - Unleash private investment to support export diversification.\n  - Reform trade policies and product and labor markets to improve cost competitiveness.\n  - Discontinue practices of centralized wage setting and indexing national bonuses to the GDP growth rate.\n  - Reduce bureaucracy in business processes and combat corruption.\n  - Move to digital processes for tax and business‑related payments.\n  - Reform the legislative framework governing state‑owned enterprises and include activities of all subsidiaries in the fiscal accounts of the non‑financial public sector.\n  - Adopt standards under the Extractive Industries Transparency Initiative and further strengthen the AML/CFT framework.\n  - Address weaknesses in data provision."
    },
    {
      "heading": "Executive Board assessment and next steps",
      "content": "- Executive Directors commended Bolivia’s impressive economic growth and social improvements but noted challenges from continued accommodative policies, lower commodity prices, and political uncertainty.\n- It is expected that the next Article IV consultation with Bolivia will be held on the standard 12‑month cycle."
    },
    {
      "heading": "Selected economic and financial indicators",
      "content": "I. Social and Demographic Indicators\n- GDP per capita (U.S. dollars, 2017): 3,382\n- Poverty headcount ratio (percent of population, 2016): 39.5\n- Population (millions, 2017): 11.2\n- Gini index (2016): 44.6\n- Life expectancy at birth (years, 2015): 69\n- Adult literacy rate (percent, 2015): 92.5\n- Mortality rate, under-5 (per thousand, 2016): 36.9\n- Gross enrollment ratio, primary, both sexes (2015): 97.1\n\nII. Economic Indicators — Baseline projections (annual percentage changes unless otherwise indicated)\n- Real GDP:\n  - 2015: 4.9\n  - 2016: 4.3\n  - 2017: 4.2\n  - 2018: 4.5\n  - 2019: 3.9\n  - 2020: (not listed)\n- Nominal GDP:\n  - 2015: 0.2\n  - 2016: 3.6\n  - 2017: 11.1\n  - 2018: 9.8\n  - 2019: 7.8\n- CPI inflation (period average):\n  - 2015: 4.1\n  - 2016: 2.8\n  - 2017: 4.0\n  - 2018: (not listed)\n- Investment and savings (In percent of GDP, unless otherwise indicated):\n  - Total investment:\n    - 2015: 20.7\n    - 2016: 21.8\n    - 2017: 24.2\n    - 2018: 24.3\n    - 2019: 22.9\n  - Of which : Public sector:\n    - 2015: 13.7\n    - 2016: 13.0\n    - 2017: 13.3\n    - 2018: 12.4\n    - 2019: 11.6\n  - Gross national savings:\n    - 2015: 15.1\n    - 2016: 16.0\n    - 2017: 16.3\n    - 2018: 15.0\n    - 2019: 13.8\n- Combined public sector:\n  - Revenues and grants:\n    - 2015: 38.1\n    - 2016: 32.8\n    - 2017: 30.7\n    - 2018: 31.3\n    - 2019: 31.9\n    - 2020: 31.6\n  - Expenditure:\n    - 2015: 45.0\n    - 2016: 40.0\n    - 2017: 38.5\n    - 2018: 38.8\n    - 2019: 38.2\n    - 2020: 37.2\n  - Net lending/borrowing (overall balance):\n    - 2015: -7.0\n    - 2016: -7.3\n    - 2017: -7.8\n    - 2018: -7.4\n    - 2019: -6.3\n    - 2020: -5.7\n  - Of which : Non-hydrocarbon balance:\n    - 2015: -14.2\n    - 2016: -10.9\n    - 2017: -11.7\n    - 2018: -12.6\n    - 2019: -10.5\n  - Total gross NFPS debt 2/:\n    - 2015: 41.3\n    - 2016: 46.6\n    - 2017: 51.1\n    - 2018: 53.5\n    - 2019: 54.6\n- External sector:\n  - Current account 1/:\n    - 2015: -5.9\n    - 2016: -5.3\n    - 2017: -4.8\n    - 2018: -4.6\n    - 2019: -4.5\n  - Exports of goods and services:\n    - 2015: 30.2\n    - 2016: 25.1\n    - 2017: 25.2\n    - 2018: 24.7\n    - 2019: 24.6\n  - Imports of goods and services:\n    - 2015: 36.2\n    - 2016: 30.8\n    - 2017: 30.6\n    - 2018: 30.4\n    - 2019: 30.1\n  - Financial account:\n    - 2015: -8.6\n    - 2016: -6.6\n    - 2017: -6.5\n    - 2018: -6.2\n  - Terms of trade index (percent change):\n    - 2015: -23.1\n    - 2016: -15.5\n    - 2017: 9.5\n    - 2018: 10.0\n    - 2019: -2.9\n    - 2020: -1.5\n  - Net Central Bank foreign reserves 3/ 4/:\n    - In percent of GDP:\n      - 2015: 39.7\n      - 2016: 29.6\n      - 2017: 27.1\n      - 2018: 21.1\n      - 2019: 18.6\n      - 2020: 16.4\n    - In months of imports of goods and services:\n      - 2015: 14.5\n      - 2016: 10.4\n      - 2017: 9.7\n      - 2018: 7.7\n      - 2019: 6.9\n      - 2020: 6.1\n- Money and credit (Annual percentage changes, unless otherwise indicated):\n  - Credit to the private sector:\n    - 2015: 17.6\n    - 2016: 14.8\n    - 2017: 12.8\n    - 2018: 11.7\n    - 2019: 10.9\n    - 2020: 10.1\n  - Credit to the private sector (percent of GDP):\n    - 2015: 52.0\n    - 2016: 57.6\n    - 2017: 58.5\n    - 2018: 59.5\n    - 2019: 61.2\n    - 2020: 62.5\n  - Broad money:\n    - 2015: 82.5\n    - 2016: 81.7\n    - 2017: 80.9\n    - 2018: 81.3\n    - 2019: 83.2\n- Memorandum items:\n  - Nominal GDP (in billions of U.S. dollars):\n    - 2015: 32.9\n    - 2016: 34.1\n    - 2017: 37.9\n    - 2018: 41.6\n    - 2019: 44.8\n    - 2020: 48.3\n  - Exchange rates 5/:\n    - Bolivianos/U.S. dollar (end-of-period): …\n  - REER, period average 6/ (percent change):\n    - 2015: 16.1\n    - 2016: 6.0\n    - 2017: -1.4\n\nIMF Executive Board Concludes 2018 Article IV Consultation with Bolivia (Press Release No. 18/453), December 6, 2018.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Bolivia and the IMF\n- IMF Policy Advice -- A Factsheet\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/2018/12/06/pr18453-imf-executive-board-concludes-2018-article-iv-consultation-with-bolivia"
    }
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    "Published: December 6, 2018",
    "On November 9, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Bolivia.",
    "Bolivia registered annual real GDP growth of 4.8 percent on average between 2004–17.",
    "The share of the population living in extreme poverty fell by half to 17 percent.",
    "Since the commodity price drop in 2014, authorities conducted accommodative fiscal and credit policies that maintained robust growth but resulted in:",
    "External competitiveness was negatively affected by the appreciating US dollar and high wage growth in the context of a stabilized exchange rate.",
    "Real GDP growth is projected at 4.5 percent in 2018.",
    "Growth is forecast to moderate to 3.7 percent in the medium-term.",
    "Drivers and assumptions:",
    "Executive Directors welcomed containment of public investment as helpful to reduce the fiscal deficit over the medium term but noted:",
    "Directors recommended ensuring social schemes are directed to the most vulnerable groups.",
    "External sector notes:",
    "Directors agreed monetary policy should focus primarily on price stability and preserving the nominal exchange rate anchor.",
    "Observations and recommendations:",
    "Directors emphasized accelerating structural reforms to strengthen productivity, competitiveness, and support diverse and broad‑based growth.",
    "Policy recommendations include:",
    "Executive Directors commended Bolivia’s impressive economic growth and social improvements but noted challenges from continued accommodative policies, lower commodity prices, and political uncertainty.",
    "It is expected that the next Article IV consultation with Bolivia will be held on the standard 12‑month cycle.",
    "GDP per capita (U.S. dollars, 2017): 3,382",
    "Poverty headcount ratio (percent of population, 2016): 39.5",
    "Population (millions, 2017): 11.2",
    "Gini index (2016): 44.6",
    "Life expectancy at birth (years, 2015): 69",
    "Adult literacy rate (percent, 2015): 92.5",
    "Mortality rate, under-5 (per thousand, 2016): 36.9",
    "Gross enrollment ratio, primary, both sexes (2015): 97.1",
    "Real GDP:",
    "Nominal GDP:",
    "CPI inflation (period average):",
    "Investment and savings (In percent of GDP, unless otherwise indicated):",
    "Combined public sector:",
    "External sector:",
    "Money and credit (Annual percentage changes, unless otherwise indicated):",
    "Memorandum items:",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Bolivia and the IMF](http://www.imf.org/external/country/BOL/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[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](http://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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