The Plurinational State of Bolivia Country Program Evaluation, FY05-13

As the result of past investments in gas and mining sectors and high world commodity prices, the Bolivian economy grew considerably during the last seven years. Prudent macroeconomic policies and high taxes on hydrocarbon revenues led to a significant accumulation of fiscal surplus and external reserves. Under a state-led development model, the government led by President Morales pursued redistributive policies and invested heavily in road construction. However, it has retained far more of the conservative fiscal and macroeconomic policies than would have been predicted. Sustained growth has translated into significant poverty reduction and improved equity as unskilled labor, including from indigenous groups, benefited from booming non-tradable sector activities. The availability of hydrocarbon revenues, however, created little incentive for the government to address the structural issues in the economy. The Plurinational State of Bolivia is more resource dependent, institutions are weak, decision making is increasingly discretionary, productivity remains low both inside and outside the agriculture sector and environmental degradation is worsening. Going forward, the Bank Group should develop a long-term partnership with the government as well as groups outside of the government. The Bank should scale up the good practice programs in agriculture and help the government develop a strategy for improving agricultural productivity and rural development more broadly. In transport, the Bank should continue to focus on road maintenance to complement the construction programs of the government and other partners.