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BOLIVIA
>> Return to Regional Overview >> Bolivia Overview 
Introduction
Bolivia’s commitment to economic stability and growth, democratic political reforms, and increased social welfare make it an exceptional development partner. It has made significant progress particularly in pursuing broad-based economic growth and improving the social conditions of the poor. However, roughly half the households in the country live below the poverty line and income distribution remains heavily skewed to the top 20%. Assisting Bolivia to reduce poverty will remain a top priority of US assistance to the country. Bolivia has made remarkable strides in illegal coca eradication over the past year. Continued assistance to increase alternative development programs will help Bolivia sustain these gains. USAID’s strategy addresses these concerns, and at the same time supports several of the principal U.S. foreign policy goals as well as the Government of Bolivia’s (GOB) National Plan of Action.
The Development Challenge
Located in the heart of the Andes, landlocked and rugged, Bolivia has only recently emerged from years of political and economic instability. Bolivia remains one of the most impoverished nations in the hemisphere with over five million Bolivians living in poverty, out of a total population of almost eight million. There remains a large income gap between rich and poor which continues to widen. Despite macroeconomic stability enjoyed by Bolivia for over a decade, large amounts of multilateral and bilateral debt relief, profound structural reforms such as the pension, justice, decentralization and customs reforms, and increasing investment levels (particularly foreign investment), Bolivia’s economic growth rate has only increased by about four percent a year in the 1990s. At this rate, it will take 40 years for the per capita GDP to double. In order to alleviate poverty, with a population growth rate of 2.3%, the economic growth rate needs to speed up considerably.
Systemic constraints such as inadequate governmental, financial and educational institutions; poor technological capability; limited financial services; poor infrastructure; and a shortage of human capital and experience, continue to impede economic growth. Additionally, while there have been recent advances in participatory democracy and environmental protection – much work remains to be done in consolidating democratic changes and reducing the degradation of natural resources. However, USAID-supported activities continue to achieve measurable success. Examples include a proven alternative development program; innovative micro-financial services for the poor; highly successful and sustainable primary and reproductive health care programs; an effective AIDS awareness and prevention program; innovative justice reform and citizen-participation programs; and state-of-the-art environmental programs. Food assistance reaches out to the poorest of the poor through direct feeding and social service programs. Most of its food resources are used in food-for-work programs in poor urban areas, constituting a safety net that helps protect the urban poor from the effects of structural adjustment.
While Bolivia is diversifying its economy slowly, it remains vulnerable to external shocks. It has been negatively affected by a continued deterioration in the terms of trade and climatic phenomena that impacts the agriculture sector which constitutes close to 18 percent of the economy. Bolivia's development agenda is to achieve higher rates of sustainable economic growth for which it will require large investments in social areas and infrastructure; and, the facilitation of private investment. The U.S. Balance of Payments program ($4.0 million for FY00), will help the GOB service its external debt schedule estimated at $273 million for 2000 – down from $305 million in 1999 due to debt relief under the HIPC I initiative. Currently under negotiation with the World Bank and International Monetary Fund, HIPC II is expected to reduce Bolivia’s debt by nearly $500 million over the next 10-15 years, thus reducing net present value of debt to exports to 150 percent.
Other Donors
Bolivia is known for having a very active donor community. The presence of donors is significant with the participation of eight multilateral and fifteen bilateral donors whose contribution averages $500 million per year. Eight other South American countries and Mexico also have active "in-kind" technical assistance agreements with Bolivia. Thirteen of the bilateral donors are DAC members. Japan and the United States are the largest. Japan’s program (approximately $80 - $90 million) focuses on the procurement of equipment, infrastructure and the balance of payments. The World Bank, IDB, UNDP, Germany, Netherlands, Spain and the United States are among the most active donors and have taken leading roles, especially in the context of the Consultative Group discussions.
Country Background Information Resources CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: December 12, 2000 |
