limits their ability to respond swiftly to

economic shocks.

BOLIVIA Key conditions and The ongoing demographic transition, in-

creasing urbanization, and a more educat-
challenges ed workforce are increasing the urgency
of generating more and better jobs. Fos-
Table 1 2023
The Government's state-led development tering foreign and private investment, as
Population, million 12.4
strategy focused on import substitution, well as productivity growth among small
GDP, current US$ billion 45.8 natural resource extraction, and public in- and medium-sized enterprises, is critical
GDP per capita, current US$ 3699.8 vestment through state-owned enterprises to accelerate growth and job creation and
a 2.0
International poverty rate ($2.15) has led to structurally high fiscal deficits, would benefit from reducing red tape, re-
a 5.4 dwindling reserves, and a loss of access moving tax distortions, modernizing labor
Lower middle-income poverty rate ($3.65)
a 15.2 to international capital markets. Macro- regulations, improving transport and lo-
Upper middle-income poverty rate ($6.85)
Gini index
a 40.9 economic imbalances have been com- gistics, easing agricultural export restric-
School enrollment, primary (% gross)
b 96.4 pounded by structural weaknesses, in- tions, and fostering environmentally and
b 63.6
cluding a narrow export base, a decline in socially sustainable mining.
Life expectancy at birth, years
gas production, and a weak business en-
Total GHG emissions (mtCO2e) 136.6
vironment that is depressing private-sec-
Source: WDI, Macro Poverty Outlook, and official data. tor investment. As a consequence, growth
a/ Most recent value (2021), 2017 PPPs.
b/ WDI for School enrollment (2012); Life expectancy is slowing significantly, and the country Recent developments
(2021). now has very limited buffers to respond
to external and climate shocks. A credible The economy expanded by an estimated
medium-term plan to reduce the fiscal 2.4 percent in 2023 as it continued to
After expanding an estimated 2.4 percent deficit, improve the business environ- slow due to declining gas exports, dollar
in 2023, the economy is expected to slow ment, and strengthen institutions is crit- and fuel shortages, political tensions, and
ical to address macroeconomic imbal- a severe drought. Subsidies and a fixed
further as macroeconomic imbalances in-
ances, ignite new sources of growth, and exchange rate helped keep inflation low
creasingly weigh on growth and prevent reinvigorate poverty reduction. at 2.1 percent in December 2023 (y-o-
poverty reduction. Limited access to ex- Fiscal sustainability and performance y change). The 12-month rolling fiscal
ternal financing, increased economic un- could be enhanced by transitioning from deficit increased from 7.1 percent of GDP
universal fuel subsidies to more targeted in December 2022 to 7.6 percent in June
certainty, and low levels of international
support mechanisms, rationalizing public 2023 as declining gas exports, high sub-
reserves will continue to constrain public investment, including in state-owned en- sidies, and rising interest payments more
spending and private sector activity. Bo- terprises, making public procurement than offset the reduction in capital expen-
livia would benefit from implementing a more efficient, and improving focus and diture. Public debt increased to an esti-
medium-term strategy to address macro- progressivity of subsidies and social mated 84 percent of GDP in 2023, with
spending. Current social assistance pro- the Government working on getting leg-
economic imbalances, enhance fiscal poli- islative approval for external loans and
grams are not effectively supporting the
cy efficiency and progressivity, and foster poor and vulnerable, with modest benefits tapping into pension funds financing,
private investment-led growth. not indexed to inflation, and their design crowding out the financial sector.

FIGURE 1 Bolivia / Public debt and international reserves FIGURE 2 Bolivia / Actual and projected poverty rates and
real GDP per capita

Percent of GDP Poverty rate (%) Real GDP per capita (constant LCU)
100 45 4500

Public debt 40 4000

80 35 3500
International reserves
30 3000
60 25 2500
20 2000
40 15 1500
10 1000

20 5 500
0 0
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
0 International poverty rate Lower middle-income pov. rate
2010 2012 2014 2016 2018 2020 2022 2024 2026 Upper middle-income pov. rate Real GDP pc

Sources: Central Bank of Bolivia and Ministry of Economy and Public Finance. Source: World Bank. Notes: see Table 2.

MPO 1 Apr 24
Growth of employment and labor force par- a severe shortage of U.S. dollars and a sig- in 2024 and 2025 amid the economic
ticipation rates decelerated throughout nificant difference between the official ex- slowdown and weak private investment.
2022 and came to a halt in 2023 due to the change rate and the parallel market rate. The purchasing power of poor and vul-
slowdown in economic activity. Underem- In February 2024, the Government agreed nerable households is expected to erode
ployment stood at 6.3 percent (2023 Q3), still with the private sector to ease the agricul- given mounting inflationary pressures
above pre-pandemic levels (4.5 percent in tural export restrictions subject to a com- and the failure to adjust the value of ex-
2019 Q3). Labor informality remains high, mitment to supply the domestic market isting cash transfers to rising prices. Infla-
with only 26.5 percent of workers covered and deposit the dollars in the financial sys- tion is expected to increase to 4.4 in 2024
by social security. Real household income tem. Still, it expressed a strong commit- as dollar shortages, political tensions, and
is expected to stagnate in 2023 due to slug- ment to preserve the exchange rate peg. social unrest generate import constraints
gish growth in real wages, alongside mod- and supply bottlenecks.
erate real growth in remittances, and social The current account deficit is projected
assistance cash transfers failing to keep to remain close to 2.5 percent due to low
pace with inflation. In this context, poverty Outlook commodity prices and declining natural
levels are anticipated to remain largely un- gas production. The impact of mobilizing
changed at 17 percent in 2023 (measured at Growth is expected to decline to 1.4 in 2024 foreign and public investment in lithium
the upper middle-income line of US$6.85/ as existing macroeconomic imbalances in- development and gas exploration is ex-
day in 2017 PPP). creasingly limit private consumption and pected to be limited during the projec-
The country's external situation weakened El Niño continues to impact agricultural tion period due to the long investment
in 2023. The current account balance is es- output in the first half of 2024. Dollar horizons. Limited access to external fi-
timated to have fallen to -2.3 percent of shortages are expected to continue as the nancing and falling international reserves
GDP, driven by a shift from a trade surplus measures agreed with the private sector to will constrain public spending, including
of US$1.8 billion in 2022 to a deficit of ease export restrictions are not part of a public investment.
US$585 million in 2023 due to a decrease strategy to address the underlying unsus- Depleted macroeconomic policy buffers
in gas exports and increased fuel imports. tainable fiscal balances. The fiscal deficit increasingly expose the economy to
The country's international reserves de- will continue at high levels due to falling downside risks, including lower com-
clined to 1.7 billion dollars at the end of the hydrocarbon revenues and high subsidies. modity prices and natural disasters. Po-
year, a value close to the legal minimum Public debt, including with the Central litical tensions limit the room to address
level of 22 tons of gold, due to declining Bank, will increase from 80 percent in 2022 imbalances and the capacity to maneuver
gas export earnings, elevated government to 87 percent in 2026 (Figure 1). in a more adverse economic context that
subsidies, repayments on foreign debt, and Poverty is expected to remain constant at could shift market sentiment and erode
gold sales. These dynamics contributed to around 17 percent (US$6.85/day in 2017 PPP) confidence in the boliviano.

TABLE 2 Bolivia / Macro poverty outlook indicators (annual percent change unless indicated otherwise)

2021 2022 2023e 2024f 2025f 2026f

Real GDP growth, at constant market prices 6.1 3.5 2.4 1.4 1.5 1.5
Private consumption 5.3 4.2 2.3 2.2 2.1 2.0
Government consumption 5.4 4.0 1.9 -1.4 -0.8 -0.3
Gross fixed capital investment 11.9 6.5 5.7 -0.2 -0.7 -0.2
Exports, goods and services 15.4 15.6 -15.4 1.8 3.0 2.9
Imports, goods and services 15.7 7.6 0.6 1.2 1.5 1.6
Real GDP growth, at constant factor prices 6.4 3.5 2.5 1.4 1.6 1.6
Agriculture 1.8 3.7 3.0 3.4 4.4 4.4
Industry 9.6 1.0 1.0 0.8 0.8 0.8
Services 5.8 5.3 3.5 1.2 1.3 1.2
Inflation (consumer price index) 0.7 1.7 2.6 4.4 4.5 4.5
Current account balance (% of GDP) 2.2 -0.4 -2.3 -2.6 -2.5 -2.5
Net foreign direct investment inflow (% of GDP) 1.2 0.7 0.7 0.7 0.7 0.7
Fiscal balance (% of GDP) -9.3 -7.1 -7.2 -6.8 -6.4 -6.5
Revenues (% of GDP) 25.1 26.6 26.4 26.2 25.8 24.4
Debt (% of GDP) 81.6 80.1 83.6 85.5 86.2 86.5
Primary balance (% of GDP) -7.9 -5.5 -5.4 -4.7 -4.1 -4.3
a,b
International poverty rate ($2.15 in 2017 PPP) 2.0 3.0 3.4 3.8 4.1 4.2
a,b
Lower middle-income poverty rate ($3.65 in 2017 PPP) 5.4 6.5 6.9 7.3 7.7 7.8
a,b
Upper middle-income poverty rate ($6.85 in 2017 PPP) 15.2 16.9 17.0 17.2 17.4 17.3
GHG emissions growth (mtCO2e) 2.7 0.5 0.7 0.6 0.8 0.9
Energy related GHG emissions (% of total) 15.5 16.0 16.6 17.2 17.9 18.6
Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Calculations based on SEDLAC harmonization, using 2021-EH. Actual data: 2021. Nowcast: 2022-2023. Forecasts are from 2024 to 2026.
b/ Projections using microsimulation methodology.

MPO 2 Apr 24