IMF Executive Board Concludes 2025 Article IV Consultation with Bolivia
IMF News, May 30, 2025
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- Published: May 30, 2025
Economic performance and near-term outlook
- Real GDP growth moderated to 2.1 percent in the first three quarters of 2024.
- Moderating factors: decline in hydrocarbons production; slowdown in services activity; drop in soy crops and related manufacturing due to ‘El Niño’ effects.
- Additional disruptions: road blockages and scarcity of foreign exchange (FX), fuels, and other critical inputs owing to critically low international reserves.
- Inflation:
- Pushed to 10 percent at end-2024, the highest level in over a decade.
- Labor and incomes:
- Unemployment has fallen, but underemployment is rising.
- Real incomes retrenched on average.
- External sector:
- Combination of FX shortages, slowing activity, and depreciation of the parallel exchange rate resulted in a compression of the current account deficit to 2.7 percent for 2024.
Fiscal position and public debt
- Fiscal deficit:
- Surpassed 10 percent of GDP in 2023-24.
- Drivers: declining hydrocarbon revenues, tax exemptions, increased social spending, and higher interest payments.
- The deficit has been mostly financed by the central bank amid tight external financing constraints.
- Public debt:
- Increased to 95 percent of GDP.
- Table excerpts (selected fiscal figures, percent of GDP):
- Revenues and grants: 27.8 (2023), 28.4 (2024), 24.8 (2025), 24.2 (2026)
- Hydrocarbon related revenue 1/: 2.8 (2023), 2.2 (2024), 1.9 (2025), 1.6 (2026)
- Expenditure: 38.7 (2023), 37.5 (2024), 37.4 (2025), 37.4 (2026)
- Current: 32.3 (2023), 33.2 (2024), 32.5 (2025), 32.6 (2026)
- Capital 2/: 6.4 (2023), 5.4 (2024), 5.0 (2025), 4.8 (2026)
- Net lending/borrowing (overall balance): -10.9 (2023), -10.3 (2024), -12.7 (2025), -13.2 (2026)
- Non-hydrocarbon balance: -15.4 (2023), -16.4 (2024), -16.3 (2025), -16.0 (2026)
- Total gross NFPS debt 3/: 90.8 (2023), 95.0 (2024), 90.4 (2025), 91.4 (2026)
Monetary framework, exchange rate, and reserves
- Executive Directors: called for a decisive shift in the monetary policy framework given the untenable peg to the U.S. dollar and depleted international reserves.
- Recommended actions:
- Realignment of the exchange rate with market fundamentals and move toward greater exchange rate flexibility.
- Front loaded fiscal consolidation and restrictive monetary policy settings to address inflationary pressures, alleviate FX shortages, and allow elimination of FX restrictions.
- Increase interest rate flexibility to facilitate effective monetary policy transmission.
- Reserves and external numbers (selected):
- Central Bank gross foreign reserves (in millions of U.S. dollars): 1,808 (est. 2023), 2,009 (2024), 2,118 (2025), 2,199 (2026)
- Reserves in percent of GDP: 4.0 (2023), 4.1 (2024), 3.8 (2025), (2026 value listed as blank)
- Reserves in percent of ARA: 20.6 (2023), 23.0 (2024), 22.3 (2025), 20.5 (2026)
- Current account: -2.5 (2023), -2.7 (2024), -2.6 (2025), -3.2 (2026)
- Exports of goods and services: 26.2 (2023), 20.7 (2024), 18.0 (2025), 16.0 (2026)
- Imports of goods and services: 28.6 (2023), 23.4 (2024), 20.4 (2025), 18.9 (2026)
- Financial account (-= net inflow): -2.0 (2023), -3.5 (2024), -2.8 (2025), -3.3 (2026)
Financial sector resilience and vulnerabilities
- Overall assessment:
- The financial sector remains well buffered.
- Key dynamics:
- Deposits declined in real terms.
- Net interest margins pressured by interest rate controls, limiting banks' ability to raise loan rates amid rising inflation and slowing credit growth.
- Improved profitability from FX trading gains.
- Capital adequacy ratio strengthened to 13.5 percent in 2024.
- Non-performing loans remained low at 3.2 percent of total loans.
- Directors' recommendations:
- Strengthen financial sector supervision amid growing economic vulnerabilities.
- Close monitoring and contingency planning.
- Implement the remaining 2024 FSAP recommendations and strengthen the AML/CFT framework.
- Enhance Bolivia’s public pension fund operations by diversifying investments and strengthening the pension supervisor’s independence.
Executive Board assessment and policy recommendations
- Overall view:
- Executive Directors agreed with the thrust of the staff appraisal and expressed concern over Bolivia’s acute fiscal and external imbalances and unsustainable policy mix.
- Urgent actions called for to address the overvalued exchange rate, bolster foreign reserves, and implement sustained fiscal consolidation.
- Fund readiness to support the authorities through its various activities was underscored.
- Careful communication of policy reforms to stakeholders is pivotal to enhance acceptability.
- Specific recommendations (enumerated):
- Shift monetary policy framework: realign exchange rate, enhance exchange rate flexibility, adopt restrictive monetary policy settings, increase interest rate flexibility.
- Fiscal consolidation: rationalize the public wage bill, phase out fuel subsidies, enhance public investment management and spending efficiency, mobilize tax revenue, and eliminate monetary financing of fiscal deficits.
- Social protection: mitigate effects of policy adjustments on vulnerable populations via improved targeting of the social safety net.
- Financial sector and governance: strengthen supervision, implement FSAP recommendations, strengthen AML/CFT framework, diversify public pension fund investments, strengthen pension supervisor independence.
- Structural reforms: undertake comprehensive supply side reforms to enhance productivity and growth potential; phase out export ceilings, price controls, and credit quotas; provide a clear regulatory framework to attract private investment; focus public investment on socially beneficial infrastructure; enhance transparency, governance, and anticorruption frameworks.
- Data and statistics: improving data adequacy remains a priority.
Selected socioeconomic and macroeconomic indicators (headline figures)
- Population (millions, 2024): 11.3
- Poverty rate (percent, 2023): 36.5
- Population growth rate (percent, 2024): 1.4
- Adult literacy rate (percent, 2023): 95.2
- Life expectancy at birth (years, 2024): 68.7
- GDP per capita (US$, 2023): 3,736
- Total unemployment rate (2024Q3): 3.6
- IMF Quota (SDR, millions): 240.1
- Historical and projected GDP and inflation (selected):
- Real GDP: 3.1 (2023), 1.3 (2024), 1.1 (2025), 0.9 (2026)
- Nominal GDP: 2.6 (2023), 6.5 (2024), 16.4 (2025), 16.9 (2026)
- CPI inflation (period average): 5.1 (2023), 15.1 (2024), 15.8 (2025)
- CPI inflation (end of period): 2.1 (2023), 10.0 (2024), 15.6 (2025), 16.8 (2026)
- Money and credit (selected):
- Credit to the private sector (percent change): 7.5 (2023), 7.2 (2024)
- Credit to the private sector (percent of GDP): 70.8 (2023), 69.2 (2024), 63.9 (2025), 58.6 (2026)
- Broad money (percent of GDP): 90.2 (2023), 87.5 (2024), 85.7 (2025), 86.9 (2026)
- Memorandum items:
- Nominal GDP (in billions of U.S. dollars): 45.5 (2023), 48.4 (2024), 56.3 (2025), 65.9 (2026)
- Bolivianos/U.S. dollar (end-of-period): 6.9 (2023)
IMF Executive Board concluding statement for the 2025 Article IV consultation with Bolivia (Press Release No. 25/168, May 30, 2025).