Currency Converter


World > South America > Bolivia > Economy (Notes)

Bolivia - Economy (Notes)

Bolivia's 2006 gross domestic product (GDP) totaled $9.3 billion. Economic growth was estimated at about 4.6%, and inflation was estimated at about 4.8%.

In 1985, the Government of Bolivia implemented a far-reaching program of macroeconomic stabilization and structural reform aimed at maintaining price stability, creating conditions for sustained growth, and alleviating poverty. The most important change involved the 'capitalization' (privatization) of numerous public sector enterprises. Parallel legislative reforms locked in place market-oriented policies that encouraged private investment. Foreign investors are accorded national treatment, and foreign ownership of companies is virtually unrestricted in Bolivia. Post-capitalization foreign direct investment (FDI) inflows have dwindled, likely due to investor perceptions of a lack of political stability.

In 1996, the Bolivian state oil corporation (YPFB) facilitated the construction of a gas pipeline to Brazil to sell natural gas through 2019. Bolivia has the second-largest natural gas reserves in South America. Its current domestic use and exports to Brazil account for just a small portion of its potential production.

In April 2000, violent protests over plans to privatize the water utility in the city of Cochabamba led to nationwide disturbances. The government eventually cancelled the contract without compensation to the investors, returning the utility to public control. International shareholders? outstanding claims were finally resolved in January 2006, when the Government of Bolivia agreed to purchase 80% of the shares in Aguas del Tunari, the joint venture company originally selected to manage the Cochabamba water concession.

Bolivian exports were approximately $4.2 billion for 2006, up from $652 million in 1991. Imports were $2.8 billion in 2006. Bolivia enjoyed a $500 million trade surplus in the first half of 2006. Bolivian tariffs are a uniformly low 10%, with capital equipment entering duty-free or incurring 5% tariffs.

Bolivia's trade with neighboring countries is growing, in part because of several regional preferential trade agreements. Bolivia is a member of the Andean Community (CAN) and enjoys nominally free trade with other member countries (Peru, Ecuador, and Colombia). Bolivia is also an associate member of MERCOSUR (Southern Cone Common Market). The Andean Trade Promotion and Drug Eradication Act (ATPDEA) allows numerous Bolivian products to enter the United States duty-free, including alpaca and llama products and, subject to a quota, cotton textiles. The current Bolivian Government has expressed interest in extending ATPDEA benefits beyond their June 30, 2007 expiration.

In 2006, the United States exported $197 million of merchandise to Bolivia and imported $362 million. Bolivia's major exports to the United States are tin, gold, jewelry, and wood products, with textiles playing an increasingly important role. Its major imports from the United States are electronic equipment, chemicals, vehicles, wheat, and machinery. A Bilateral Investment Treaty (BIT) between the United States and Bolivia came into effect in 2001.

Agriculture accounts for roughly 15.3% of Bolivia's GDP. The amount of land cultivated by modern farming techniques is increasing rapidly in the Santa Cruz area, where weather allows for two crops a year. Soybeans are the major cash crop, sold in the CAN market. The extraction of minerals and hydrocarbons accounts for another 11% of GDP and manufacturing around 17%.

The Government of Bolivia remains heavily dependent on foreign assistance to finance development projects. At the end of 2006, the government owed $3.2 billion to foreign creditors, with 12% of this amount owed to other governments and the balance owed to multilateral development banks. Between 1986 and 1998, Bolivia attended seven rounds of negotiations with Paris Club creditors and received U.S. $1.35 billion of bilateral debt forgiveness. The United States forgave almost all of Bolivia?s bilateral debt between 1999 and 2002 and strongly supported efforts to have multilateral institutions do the same. Bolivia received U.S. $1.95 billion in debt relief from HIPC (Heavily Indebted Poor Countries) I in 1998 and HIPC II in 2001, including almost complete bilateral debt forgiveness.

In June 2005, the G-8 countries decided to provide renewed World Bank and International Monetary Fund (IMF) debt relief for the 18 participant nations of HIPC I and II through the Multilateral Debt Relief Initiative (MDRI). Bolivia received U.S. $232.5 million in debt relief from the IMF in January 2006 and approximately U.S. $1.5 billion in debt relief from the World Bank in June 2006. The Inter-American Development Bank (IDB) forgave $1 billion in debt in March 2007. Bolivia was one of three countries in the Western Hemisphere selected for eligibility for the Millennium Challenge Account in 2004. Bolivia qualified again in 2005 and 2006, and presented a proposal to the Millennium Challenge Corporation in December 2005.

Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.

Facts at a Glance
Current Time
Ranking Positions

Notes and Commentary
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.

   Privacy & Disclaimer

   Portions of this site are based on public domain works from the U.S. Dept. of State and the CIA World Fact Book
   All original material copyright © 2002 - All Rights Reserved.
   For comments and feedback, write to us at [email protected].