The International Monetary Fund (IMF) Executive Board completed its Article IV consultation with Bolivia on May 2, 2025. The Bolivian authorities have agreed to the publication of the Staff Report related to this consultation.
Bolivia's economy has faced several challenges, with real GDP growth slowing to 2.1% in the first three quarters of 2024. This slowdown is attributed to reduced hydrocarbons production, a decline in services activity, and decreased soy crop yields due to ‘El Niño’ effects. Additional economic disruptions were caused by road blockages and a scarcity of foreign exchange, leading to inflation reaching 10% at the end of 2024—the highest in over a decade. While unemployment has decreased, underemployment is on the rise, and real incomes have generally fallen.
The current account deficit compressed to 2.7% for 2024 due to FX shortages and other economic pressures. The fiscal deficit exceeded 10% of GDP in both 2023 and 2024, driven by declining hydrocarbon revenues and increased social spending among other factors. Public debt has risen to 95% of GDP.
Despite these challenges, Bolivia's financial sector remains resilient with improved profitability from foreign exchange trading gains leading to a strengthened capital adequacy ratio of 13.5%. However, deposits have declined in real terms due to interest rate controls affecting banks' ability to raise loan rates amid rising inflation.
The IMF Executive Directors expressed concern about Bolivia’s fiscal and external imbalances and unsustainable policy mix. They urged immediate action to address these issues including adjusting the overvalued exchange rate and bolstering foreign reserves through sustained fiscal consolidation.
"Directors stressed that the untenable peg to the U.S. dollar and depleted international reserves call for a decisive shift in the monetary policy framework," they stated. A move toward greater exchange rate flexibility was recommended alongside fiscal consolidation measures such as rationalizing public spending and phasing out fuel subsidies.
Directors also highlighted the importance of mitigating policy adjustment impacts on vulnerable populations through improved social safety nets while emphasizing stronger financial sector supervision amid growing vulnerabilities.
They called for comprehensive supply-side reforms aimed at enhancing productivity and growth potential by removing export ceilings, price controls, and credit quotas among other measures.
The next Article IV consultation with Bolivia is expected within a standard annual cycle.
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