Meeting of the consultative group for Bolivia

 MEETING OF THE CONSULTATIVE 66789 GROUP FOR BOLIVIA Washington,D.C., December9-11, 1993 Report of the Proceedings BACKGROUND by the Chairman 1. The Consultative D.C., under the Group for Bolivia chairmanshipof met on December America and the YoshiakiAbe, Director, 9-11, 1993, in Washington, Caribbean Region, CountryDepartment delegationsfrom of the World Bank. HI, Latin Brazil, Canada, The meeting was Switzerland,the France, Germany, attendedby United Kingdom Japan, DevelopmentCorporation and the United States. the Netherlands, Spain, Sweden, (IFAD), the Inter-American (CAF), the International Also represented Fund for Agricultural were the Andean Cooperationon Agriculture DevelopmentBank (IDB), Development AmericanHealth (IICA), the International the Inter-AmericanInstitute Organization(PAHO), Monetary for the United Nations InternationalDrug the United Nations Fund (IMF), the Pan- InternationalChildren's Program (UNDCP) DevelopmentProgram (UNDP), Fund (UNICEF). and the United Nations The full list of delegates 2. The followingDocuments is given in Annex were distributed A. for the meeting: BY THE GOVERNMENT OF BOLIVIA: Alternative Development EconomicDevelopment Human Development SustainableDevelopment BY THE WORLD BANK: Bolivia: State of the Bolivia: Education Economyand the ReformProgram Sector-A Proposed InternationalAssistance Strategyfor Sector Developmentand OPENING STATEMENT BY THE CHAIRMAN 3. The Chairman began of Bolivia (Annex his statementby B). He described relating his stabilizingits economy Boliviaas a countryown perspectiveon the uniqueness economic and social and in solidifyingits democracy which has made great progress plagued by serious reforms. Despite these achievements, through a series in structural problems, of successful economic growth namely a dependence however, the country and unfavorable is still on primary commodities, comparativesocial indicators. slow 4. The Chairman commented President, Lewis on his Preston. He stressed recent trip to Bolivia with the their positiveimpressions World Bank's of the new government and  2- of the ambitious plans for the social and economic facing both a great opportunity transformationof the country. public sector successful. and a great challengeto Bolivia is He stressed that the delegates make these radical changes of the support to Bolivia in this present should continue crucial momentof opportunity. providing ECONOMIC, HUMAN AND SUSTAINABLE DEVELOPMENT Statement by the Head of the Bolivian Delegation 5. The Honorable Fernando gave the opening statement Illanes, Minister of on behalf of the BolivianFinance and EconomicDevelopment, noting that the new administration Delegation (Annex C). initiated in 1985in order will continue to deepen He began by to promote equitableand the process of structural sustainablegrowth for change 6. aU Bolivians. The Minister proceeded noting the considerable to summarizethe achievements changes which have occurred of previous administrations Before 1985, external debt in Bolivia during the last by inflation rate was among represented 75% of GDP, ten years. growth rates were negative, Governmentof Victor the highest in the continent and social conditions the Paz Estenssoro implemented were poor. The inflation, reduce the fiscal a radical reform program debt. Despite the high deficit, open the economyto competitionand to control social cost of this program, renegotiate external the resulting political consensus democracy was in fact allowed implementation strengthenedand of the reforms. 7. The Minister elaborated the persistent conditions on the main challenges of poverty and social inequality, facing the new Government, indigenouspopulations. especiallyaffectingthe namely Numerous factors hinder rural and and inequitable income distribution. The public economic growth and perpetuate poverty outdated and contradictory. sector resource in Bolivia due Human capital, important is inefficientand the judicial system is to the for economic growth, infrastructure is insufficient, poor educationaland health conditions. The is a scarce adverselyaffecting exports public sector is also inefficient existing and a rational use of resources. participation is hindered in providing basic services The by an inadequate regulatory and in key sectors private low levels of investment, sector meager domestic savings framework. Other problems include exports, caused by the fall in internationalprimary and a decline in the value of Bolivian of clear norms distorts the rational use of natural commodity prices. Finally, the absence resources. 8. Minister Manes summarized months, stressing their the new Government's commitmentto continue achievementsin the last and equitableeconomic implementingreforms four growth. The Government to achieve sustainable of investmentand savings, program is designed to development, transform expand the export base, promote agricultural increase the levels the and environmentand promote provision of education, health and basic services,rural the rational management preserve the Reform of the Executive of Branch which consolidated natural resources. He cited the recent the number of Ministries from 17 to 10  -3- as a positive first step. However, he mentionedthat initiativesto reform public enterprises have met with some resistance. 9. The Minister highlightedthe elements of the Government'sreform program, namely economic, human and sustainabledevelopment. He declared their intention to create a universalpension system to improve quality, extendcoverage and increase domestic savings in the medium- to long-run. Financial sector reform--primarilythrough the enactment of the BankingLaw--will continue, in an effort to increase savings, improve intermediation,reduce interest rates and upgrade efficiency. The aim of the Judicial reform will be to guarantee the efficientadministrationand delivery of justice. 10. The Minister stressed the importanceof expandingnon-traditionalexports, due to their macroeconomic employmentimpacts. The Governmentwill promote non- and traditional exports with high-laborcontent, gas exports to Brazil and tourism. The extension of export corridors are of importanceto this program, since they will improve Bolivia's routes to the Atlantic and Pacific Oceans and will expand connectionroutes to Argentina, Brazil, Paraguay and Peru. Declining prices of Bolivia's main exports and competingcoca production will impede the Government'sefforts in this area. 11. Minister Manes outlinedthe agriculturaland rural developmentprogram which targets increasedproductivity and increased sectoral revenues. The reforms, including the sustainabledevelopmentof forestry resources, are designed to extend technical assistance and production support infrastructure, developthe network of commercialroads and minimize production risks from climate conditions. Most importantly,the Governmentwill take steps to ensure property rights of land owners which will allow producers to gain access to credit, transfer property rights and form associations. 12. The Minister noted the importance of the public enterprise capitalizationprogram through which investmentlevels will be increasedand Boliviancitizens will be given equity within the new enterprises. Both foreign and domesticinvestorswill be allowed to provide capital and, in tum, will be entrusted with the administrationand managementof the enterprises. The Govemmentalso indicatedan intentionto continueprivatizing the small enterprises. 13. Minister Illanes emphasizedthe need to close the gap between Govemmentand the people through the popular participationand decentralizationprogram. This effort will progressively establish local mechanismsof popular participation, so that the people have a voice in determiningproject priorities and service levels, particularlyin the social sectors. Measures will be adopted to improve health care conditionsand coverage and to reduce child malnutritionlevels, as well as to increase and improve water and basic sanitation services. The Governmentwill reform the educationsystem in order to increase its quality, coverage and efficiency. --  -4- 14. Minister Manes noted the fundamentalrole which internationalassistance has played in cushioningthe shocks of structural adjustmentand economic stabilization. External assistance to Bolivia increased from US$200 million in 1988 to US$750 million in the last years. Half of these resources are credits directed towards balance of payments support and a substantialportion are donations for technical assistance and food aid. The Governmentis conscious of the country's dependenceon external financingand of the need to become more self-sufficient. The Governmentasked the internationalcommunityto shift more support towards projects and investments. 15. To attain their ultimategoal of sustainablegrowth and self-sufficiency,the Government'spolicy is based on the following principles: (a) channel both domestic and external resources into programs targeting human development,accelerated growth, infrastructure and modernizationof the state; (b) substitutetechnical assistanceby investment; and (c) improve the coordinationof internationalassistance to avoid duplication and wasting resources. The primary goals of this policy are to develop human capital, alleviate poverty, protect the environmentand ultimatelyeliminate food aid. 16. The Minister admitted that, in order to achieve these goals, the Governmentmust implementradical structural reforms. A first step has been taken with the Executive Branch Reform and the integration of financingand budgeting mechanisms. The process of decentralizationand popular participationwill allow for project monitoringby the beneficiariesthemselves. In order to support these efforts, the Fund for Regional Development(FNDR), the Fund for Rural Development(FDC), the National Fund for the Environment (FONAMA), the Social InvestmentFund (FIS) and the National Fund for Social Housing (FONVIS) will be strengthened. The capitalizationof public enterprises will free public investmentresources for projects in human developmentand infrastructure, as well as increase availabilityof scarce counterpart funds. Finally, the modernizationof the State and the Civil Service Reformwill improve the efficiencyof public institutions. 17. Minister Manes delivered a historical review of public investmentpatterns in Bolivia, noting that investmentlevels have been 8% of GDP. The distribution has been skewed-80% going to the productive sectors and only 20% to the social sectors-and 50% of total investment has been from Bolivian resources. The Minister concluded by reiterating that the Governmentis requesting investmentand access to markets more than assistance. With the political support and backing of the internationalcommunity, Bolivia will be able to overcome its problems of backwardnessand poverty, through the implementationof the "Plan de Todos". Statement by the Minister of Sustainable Development and the Environment 18. Minister Justiniano recognized that Bolivia's economic, human and environmental developmentwill not be sustainable, unless-theGovernmentimplementsan integrated model of sustainabledevelopmentwhich coordinates and integrates efforts in the thrse areas (Annex D). This model will allow for public participationin the social sectors and the Government  -5- will serve as a facilitator of change. Action must be taken immediatelyto prevent the deteriorationof natural resources. The extensivemigration from rural areas to cities and the high populationgrowth have had serious environmentalconsequenceswhich cannotbe resolved by the municipalities. The practices of certain mining companiesare also responsible for serious air and water pollution. 19. The lands and forests, which have provided a buffer for generatingjobs and solving social problems, are disappearing. High populationgrowth is generatinga demand for employmentwhich the economycannotprovide. The productive capacity of the highland areas is deterioratingand the lowlandsare ecologicallytoo fragile to sustain itinerant farming and commercialagriculture. The migration of rural dwellers and their uncontrolled exploitationof land is also having environmentaland social consequences. Moreover, the selective cutting of forests is proceedingmore rapidly than the regeneration. Critical poverty and the lack of 'grass-roots' participationmechanismsare closely linked to environmental damage. Bolivianquality of life indices-especiallyin rural areas--are among the lowest in the world. The Governmentmust provide a way for the people to address their own problems. 20. Minister Justinianocommunicatedthe Government'sview of sustainabledevelopment as an integrated process among the areas of economic,human resource and natural resource development. In the economicarea, the program will promote GDP growth, efficiency, export generation and increased tax revenues. Specifically,it will: (a) establish the regulatory frameworkfor private sector participation; (b) improve transportationand communicationsinfrastructure,especiallyin export corridors; (c) eliminate State involvement in the production of goods and services through the capitalizationand privatizationprograms; (d) improve tax collection;(e) develop domesticsavings; and (f) establish civil service training programs and encourage careers in public administration. In the area of human resources, the Governmentwill: (a) redirect resources to rural areas; (b) strengthen education through a more decentralized system; (c) provide for grass roots involvementto empower the people; (d) integrate provision of servicesand problem resolution across all social sectors; and (e) give special attention to most vulnerablegroups. In the environmentalpolicy platform, the Government'sintegrated plan will incorporatekey environmentalplayers from all sectors. The main elementsof the program include: (a) a comprehensiveprogram to increase awareness and educate the public; (b) the formulationof a comprehensive SustainableDevelopmentStrategy; and (c) preparation and enforcementof regulations with incentives and penalties for the sustainablemanagementof resources. 21. The Minister mentionedthe creation of the Ministry of SustainableDevelopmentand the Environmentwith the primary responsibilityof implementingthis integrated approach to developmentthrough long-term planning, conservationof natural resources and environmentalprotection. The Ministry will be constantlyinteracting with the ministriesof Human Developmentand Finance and EconomicDevelopmentand further coordinationwill be gained through the SustainableDevelopmentCouncil. Minister Justinianodelineated the Ministry's main tasks, stressing the formulationof Land, Forestry and Water Laws, the  -6 - establishmentof clear land titling procedures and of a rural cadastre and the implementation of a campaign to educate the public. He underlined the need for three coordinated systems: a think tank for politicaland economic analysis, an informationsystem and a systemof popular and institutionalparticipation. 22. The Minister concluded by indicatingthat Bolivia is well-equippedto tackle this opportunityfor change due to its extensiveterritory, controllablepopulationgrowth, abundantnatural resources, existenceof grass roots organizationsand lack of a large industrial sector to cause large-scaleenvironmentaldamage. Statement by the Minister of Human Development 23. Minister Romero initiated his statementby remarking that there will not be positive results from the reforms unless the deficienciesof the social sectors are corrected (see Annex E). The Governmenthas developedits human developmentpolicy consistent with its global vision of providing Bolivianswith opportunitiesand facilitatingparticipationin the system. This vision rests on the recognitionthat the economic and social elements are linked under the umbrella of sustainabilityand should therefore be given equal attention. In order for this vision to materialize, social conditionsin Bolivia must be significantlyimproved. 24. The Government'shuman developmentstrategy is predicated on the need for institutionalreform. The Reformof the ExecutiveBranch reflects a commitmentto improve the effectivenessof the executivebranch and to dedicate special attention to the social sector. This reform which includes the creation of the Ministry of Human Developmentaimed at providing an integratedview of social development. 25. The Governmentrecognizes that economic developmentalone is not sufficientbut that the developmentof human resources and the rational use of natural resources are important engines for overall development. In such a situation, intervention may be necessary to guarantee every citizen access to the wealth. The new Ministry has to overcome a historical neglect of the social sectors and a tradition of political interference and duplicationof programs. Other problems include a misallocationof resources, and lack of participationon the part of the average citizen. 26. Minister Romero declared that facilitatingpopular participationin the system is one of the most important challengesfacing the Government. The Ministry is charged with making popular participation a reality by strengtheningcommunityconscienceand by strengthening the level of authority closest to the individual. However, the implementationof these policies will be difficult. Legal and institutionalimpedimentsmust be removed and benefits clearly explained to foster popular participation. The Governmentwill also have to overcome the resistance of the political class to part with power. 27. The Minister concluded by confirmingBolivia's commitmentto change. He recognized that the success of the reforms depend to great extent on the performanceof the  -7 - BolivianGovernmentand people. However, since resourcesare a decisive componentof success, he noted the urgency for internationalpolitical and material support. He called for the internationalcommunityto assist Bolivia in taking advantageof this opportunityfor change. Statement by the World BankDelegation 28. Mr. Dennis de Tray, on behalf of the World Bank, reviewedthe country's economic performanceand the Government'sprogram (AnnexF). He noted Bolivia's success in managinga smooth democratictransition after the June presidentialelectionsand in ensuring the continuationof the market-basedmodel of developmentlaunched by President Estenssoro's administrationin 1985. 29. Mr. de Tray discussedthe reform program of the Governmentof Mr. Sanchez de Lozada, focusingon the ambitiousplans to accelerateprivate sector investmentand to aggressivelyattack Bolivia'spervasivepoverty. He commentedon the Government's commitmentto remove the public sector from productive and commercialactivities and to redirect its focus towardsproviding essential infrastructureand social services. Past efforts to reform public enterprises have had only modestresults and private sector investmentlevels are lower than the levels needed for sustainedgrowth. The proposed capitalizationprogram will stimulateprivate investmentby forging a partnership between the people of Bolivia and private investors and will bring public enterprisesfresh capital, new technologyand management. A new regulatory and legal frameworkin key sub-sectorswill boost private sector confidenceand stimulateprivate involvementin other sectors as well. However, the public sector must provide adequatebasic servicesto all Bolivians,a goal which the Governmentaims to achieve through increased communityparticipation. 30. In conjunctionwith implementingthese ambitiousreforms, Mr. de Tray stressed that the Governmentfaces serious challenges. The most immediateproblem is the need to return to macroeconomicstability--anessentialprerequisite for growth. Another hurdle is that implementingthe reforms will require strong institutional,regulatory and legal support. He cited the Civil Service and Judicial reform programs as essentialto achieving success. The public sector will also face a challengein shiftinginvestmentfrom the productive sectors to human development,especiallygiven the past weak project implementationrecord. He indicated that communityparticipationis the correct vehicle for change; but it will require hard work for results to materialize. 31. Mr. de Tray concludedby stating his faith in the ability of the new Govemmentto face the serious challengesahead. He stressed, however,the need to accelerate the pace of implementingthe reforms, somethingwhich has lagged during the transition between administrations. Mr. de Tray closed by expressinghis belief that the new administration is faced with a unique opportunityfor changeand it deserves more than the customary support from the internationalcommunity.  -8- Statement by the IMF Representative 32. The IMF representative,Ms. Patricia Brenner, reported that, despite fiscal slippages in 1993, Bolivia has continued to successfullyimplementthe economic program initiatedin 1985 (Annex G). She noted that the Fund has supported this effort through ESAF agreements in 1988 (SDR 136 million)and in 1992 (SDR 27.2 million). Ms. Brenner summarized the progress achievedin the period 1989-93, but cautioned that the economy remains vulnerable to external shocks and that debt service is still high. She noted that performance in the first half of 1993 was weak, as lax fiscal policy has resulted in an increased deficit and inflationhas slightly increased. 33. Ms. Brenner noted that the Governmenthas formulatedan economic program for 1994 incorporatingimmediatefiscal adjustments,including downsizingthe public sector. The 1994 program aims at lowering inflationto 7.5%, increasing GDP growth to 4% and decreasing the current account deficit to 8%. This will be achieved through a modest recovery in the terms of trade and strong export performance. In the fiscal area, the program targets a reduction in the deficit from 6 % of GDP to 3%. Fiscal measures include controlling current expendituresthrough a restrained public sector wage policy and shifting public investment resources toward the social sectors and infrastructure. Ms. Brenner indicated that the eliminationof the public sector domesticborrowing requirement will stimulateprivate investmentand that the exchangerate will continue to be set by daily auctions in the Central Bank. She mentionedthe reform program which includes education reform, pension reform, streamliningof fiscal management,and the establishmentof an autonomousCentral Bank. To attract private investment,a key componentis the capitalizationprogram. Currently, a capitalizationlaw and accompanyingregulations are under preparation. 34. Ms. Brenner observed that the implementationof Bolivia's economic and social program will require substantialextemal support. Private financingand debt rescheduling will continue to play an important role, and official grants and long-term loans for 1994-95 should be similar to levels received in the last two years (US$550-600million/year). Given Bolivia's low income and debt servicing capacity, virtually all of the assistance should be on concessional terms. 35. In closing, Ms. Brenner stated that the Fund will continue to work with the authorities in support of their economic program. She announced that discussion for a new program could begin after the successful completionof the current arrangement. General Discussion 36. A number of speakers complimentedthe Bolivian delegation for their coherent presentations and commended the Governmentfor maintainingstability and continuity in the reform efforts. In addition, many speakersvoiced their support for the Government's intensifiedemphasis on the social sectors and the environment,as well as towards fostering  -9- greater private and popular participation. Other speakersexpressed some reservationsand asked questionson specificaspects of the reform program. The main topics addressed in the discussion were: (a) control of fiscal deficit; (b) decentralizationand popular participation processes; and (c) land tenure and titling program. 37. Control of the Fiscal Deficit. A numberof speakersexpressed concern over the recent deteriorationin the fiscal deficit and emphasizedthat maintainingsound macroeconomicpolicy is essentialfor growth and stability. The Governmentagreed and reiterated its intention to continueimplementingthe IMF program. 38. Decentralizationand Popular Participation. There were a number of questions on the implementation the decentralization of process and the steps to be taken to ensure popular participation. Specifically,there were concerns regardingthe role of the Regional DevelopmentCorporations(RDCs) under the new frameworkand the impact that a reorganizationwould have on projects under their supervision. Minister Illanes responded that the organizationalstructure of the RDCs is being studied and the new structure has yet to be determined. RDCs may act as the regional representativeof the Ministry of SustainableDevelopmentand the Environmentand perform certain planning and coordination activities. Mr. Romero stressed the distinctionbetweendecentralization--which refers to an administrativeprocess--andpopular participation--which refers to a socio-politicalprocess. It was also noted that a distinctionshould be made between agriculturaldevelopmentand rural development. 39. Land Tenure and Titling Reform. MinisterJustiniano stated that the Govemmentis working hard in cooperationwith internationalorganizationsand expect to have a new Land Tenure Law by January. In the institutionalarea, three existing instituteswith overlapping functions will be consolidatedinto one. The legislationwill reallocate land previously given away and will provide easier access to land for small producers. 40. The Governmentwas asked to clarify a number of things, specifically,the projected public investmentlevels in the social sectors. Minister Illanes replied that the proposed compositionis 50% in social sectors, 45% in economic sectors and 5% in sustainable development. Minister Romero added that it will be a challengeto shift the current investmentdistribution(80% for productive sectors and 20% for social sectors) to a 50-50 distribution. The Governmentrecognized that implementationcapacity would have to be strengthenedto achieve these targets. 41. One participant voiced concerns that the public investmenttargets are optimistic, and that currently the program lacks sufficientoperationalization detail. It was noted that a and great deal of uncertaintyexists at the project level because of the restructuring of the institutions. It was recommendedthat the existingprojects be scrutinized and terminated if not in line with the new Governmentcriteria.  - 10- 42. Another representativeinquired about the impact of the reforms on private consumption. Minister Manes observedthat if savings and investmentare to increase, consumptionwill suffer. However, he expressed confidencethat Bolivianswould accept this if there were concrete benefits, specificallyimprovedsocial services. THE ECONOMIC DEVELOPMNT PROGRAM Statement on the Economic Situation and the Capitalization Program 43. Within the framework of the 'Plan de Todos", Minister Illanes presented the Government'seconomic objectives:job creation, increased investment, economic stabilization,allocationof resources to education and health, and popular participation. He first reviewed the current state of the economy. In 1992, the GDP growth was 2.7%, the fiscal deficit was at 4.8% (6.6% in 1993) and inflationwas 10.8% (10% in 1993). Deposits in private banks increased by 31% between 1991 and 1992. With regard to the balance of payments, exports have been declining in value since 1990 and imports continued to increase in 1992. During 1993, Bolivia eliminatedits external debt with commercial banks. 44. The Minister elaborated on the Plan de Todos strategy which aims to: (a) increase private investmentthrough capitalization;(b) raise labor productivityin part by improving social services; (c) expand and diversify exports; (d) foster popular participation; and (e) modernizethe state through electoral and Civil Service reform. 45. Minister Manes presented the capitalizationprogram as an innovativeand dynamic process which, through private investment,is expected to accelerate GDP growth and to generate employment. Public enterprises to be capitalizedinclude: ENTEL, ENDE, YPFB, LAB, ENFE, ENAF, AASANA, and ECOBOL. Strategic investors will receive up to 50% equity in the enterprise, while the remainingequity will be distributedamong the Bolivian people through private pension funds. A CapitalizationLaw, accompaniedby a Sectoral DeregulationLaw, will provide the frameworkfor the process. Consultantswill be hired to assist in designing the capitalizationstrategies, evaluatingthe companies, and marketingand negotiatingthe deals. Financing required to implementthe program has been estimated at US$137 million. Discussion 46. Numerous speakers commentedon the capitalizationprogram, requested clarifications on certain aspects of the process and noted the lack of success in previous privatization efforts. Minister Illanes reiterated the distinctionbetween capitalizationand privatizationand observed that previous privatizationefforts had focused on small complicated companies. The capitalizationprogram is targeted towards the major enterprises and will include a capital contributing strategic partner. The price of the enterprise will be market-determined and the Government will receive no proceeds from the transaction. Small companies will  - 11 - continue being privatized as before, however,priority will be given to capitalizingthe large enterprises. 47. One participant asked for a clarificationon savings, investment,and imports over the next few years. Minister Illanes responded that with capitalizationinvestmentshould be greater than imports but that imports should catch up with investmentat some point. A representativefrom the World Bank added that the Bank's projectionswere conservative assumingthat capitalizationwould be implementedover a number of years and that the compositionof imports would shift from consumptiongoods to capital goods. Statementon the Export CorridorsProgram 48. The National Secretary of Finance, Mr. Fernando Cossio, presented the Govemment'sprogram to expand Export Corridors and improveinfrastructure. He commentedon the urgent need to provide the country with a paved road network to the sea and to developconnectionsboth internallyand with neighboringcountries. 49. The Secretary described the four main export corridors projects. The first corridor providesa connectionbetween the Atlanticand Pacific Oceans, running from Tempo Quemado at the border with Chile to Puerto Suarez. This integrates the axis of La Paz, Oruro, Cochabambaand Santa Cruz, which accounts for 70% of GDP and 80% of the population. The second corridor connects Trinidadto the border of Argentina (Yacuiba)and permits access to Argentineanports and to the Republicof Paraguay. The third corridor connects the Altiplano to the LowlandsbetweenTrinidad and Desaguadero, integrating the production areas of La Paz and Beni and allowing for exports to Chile and Perd. The fourth corridor integrates the Northwestwith the south regions running through several departmentalcapitals and connectingLa Paz to the border with Argentina. 50. Due to the difficulttopography,Secretary Cossio stressed the high cost of these projects, estimatedat around US$1.3 billion over a period of eight to ten years. Discussion 51. With regard to these road projects, one participant asked if internal rates of return had been calculatedand if feasibilitystudies had been conducted. Mr. Cossio responded that many studies have been conducted but none calculatedrates of return. The World Bank added that there is need for more economicanalysis on roads. Mr. Cossio indicatedplans to transfer the constructionand maintenanceof roads to small private firms, while the Servicio Nacional de Caminos (SNC) would have a normativeand regulatory role. He also stressed that road building requires significantcapital and that Porto Sudrez deserves high priority. 52. Another delegate remarked that the implementationof two ongoing road projects had been delayed during the transition period and emphasizedthat the Governmentshould improve implementationon existingprograms before starting new ones. The Brazilian  - 12 - representativeemphasizedthat export corridors are also of great importance to Brazil and that they should be completed as soon as possible. He also asked which networks were priorities and how Brazil could support Bolivia's effort. Minister Illanes responded that Puerto Suarez and the Paraguay-Paranl water way would receive high priority and welcomed Brazil to contribute towards building and financingthese roads. Finally, one representative expressed concern over Bolivia's ability to repay multilateraldebt. It was agreed that this topic should be studied. Statement on Non-Traditional Exports 53. Minister Illanes reviewed the recent status of exports, noting the decline of traditional exports-mining and hydrocarbons--since1990. Non-traditionalexports including soya, wood, sugar and coffee are still only 30% of the total, but have great potential. The tax exemptionsgranted by the recent Export Law are expectedto attract more companies to the export sector. Improved access to markets through agreements with the US and the EEC, however, have not produced the desired results due to the high transportationcosts. Hence, there is a need to develop export corridors. The Minister indicated that the Govemment aims to increase exports to US$1.5 billion and generate around 80,000 jobs. To achieve these goals, the National Export Council will implementa program of financial, institutional and special project support, estimatedat US$68.8 million. Discussion 54. A number of delegates asked questionsregarding the expansionof non-traditional exports or took the opportunityto make general comments. One participant expressed the view that the World Bank document prepared for the meetingwas too descriptiveand would have been more useful if it had analyzed the Govemment'sinvestmentprogram. He also emphasized the need to develop export market niches and to develop concrete projects not just plans and dreams. Minister Illanes responded that Bolivia is requesting funds for studies and technical assistance to help develop these projects. Mr. de Tray remarked that the Bank document had been written before the Govemment'sinvestmentprogram was made available. Another delegate inquired about the role of the BolivianExport Foundation. Minister Illanes replied that the role will be determined by studies. Statement on the Bolivia-Brazil Gas Pipeline 55. Minister Illanes initiatedthis presentation noting the complexity of this venture and its significanteconomic impact. Under discussion for more than twenty years, political and technical problems on both the Brazilianand the Bolivianside have stalled progress. However, now the two countriesare on the same track and are willing to move ahead. Estimated costs include US$2 billion for the entire pipeline to reach Sao Paulo. Of this, Bolivia alone needs US$700 million to develop fields and installationsand US$420 million for the pipeline.  - 13 - Discussion 56. The Brazilian delegationagreed that the pipeline has been a long-standingpolitical problem and pointed out that the project could have serious environmentalramifications. Statement on Agricultural Development 57. The Sub-secretaryof Public Investmentand Financing, Mr. Marcelo Mendez, noted the Government'sdecision to spread rural developmentresponsibilitiesamong several ministries. Several smaller secretariats have been formed to handle specificaspects of rural development--human development,ethnic affairs, environmentalimpact and alternative development. The Governmentwill promote technology,research at the regional level, and a foundationfor follow up purposes. The program consists of a number of sub-projects, includingthe National Seed Program, and aims to strengthenagricultural infrastructureand enable small producers and farm communitiesto meet specializeddemands. The Governmenthas also establisheda nationalsecretariat responsiblefor the transfer of technologyand agriculturalextensionsto address specificconcerns of the regions. In the legislativefield, sanitary and quality standards will be established. The Sub-secretary mentionedspecific sub-projectsand concludedby requesting donor support for priority projects. Discussion 58. One representativeasked whether the food aid will be replaced. Minister Justiniano expressedconfidencethat during the period, food aid would diminishand in the future will be necessary only in cases of natural disasters. A representativeof the World Bank stressed the need to sterilize food aid so that it does not enter the market to distort prices. He pointed out that food aid should be used for supplementalpurposes. Another delegate asked why agricultural sub-projectsare to be conductedby the Governmentand are not left to the private sector. Mr. Mendez replied that the state will only provide necessary technical support and most of the projects will be financedby private investors. Statement on Civil Service 59. Mr. Fernando Cossio stated that the objectivesof the Civil Service Reform have not changed since 1988, when the project was first submittedto donors. The goal is still to recruit highly qualifiedand well-remunerated public servants in order to improve efficiency. Sub-systemson organization,personnel hiring, service evaluation,wage determination, training and control and auditing have been developed. The program will be implementedin three stages, gradually incorporatingmorejobs and support levels. Internationalcooperation is currently financing 1,180 positions costing US$11.4 million annually. During 1994, the Treasury will earmark US$1.5 million to the program and in the 10th year of the program, it will become fully financedby the Treasury. Additionalexternalfinancingrequired for the 10-yearperiod is calculatedat US$56.7 million. In his plea for donor financing, the  - 14 - Secretary reminded the participantsthat an efficientcivil service is key to strengtheningthe government. Discussion 60. One delegate inquired whether or not gender issues had been addressed in the Civil Service Program. Mr. Cossio declared that the hiring procedures would depend on qualifications,not on gender. A representativeof the World Bank voiced support for the program, but urged for immediateaction. He also indicated that this will be an extremely difficultprogram to implementin a constructivemanner. Statement on the Tourism Program 61. Minister Illanes noted that although Bolivia has potential for developingtourism, there is presently little supportinginfrastructure. The Government's goal is to boost investment and income in the tourism industry and to increase employmentfrom 20,000 to 60,000 persons. The investmentprogram includes: (a) establishmentof a Foundation for the Promotion of Tourism; (b) establishmentof a Tourism DevelopmentFund to promote infrastructure development;(c) developmentof ecological and cultural tourism, including the creation of national parks; and (d) creation of Cultural Centers for Tourism with the participationof the indigenouspeople. The total cost of the program is estimatedat US$27.5 million over a period of four years. 62. In concludingthe opening day of the meeting, Minister Illanes summed up the total aid requested for economic developmentat US$1.7 billion. THE HUMAN DEVELOPMENT PROGRAM Statement by the Bolivian Government 63. Minister Romero presented the Govemment's human developmentprogram. He stressed that human developmentshould not be viewed from a top down approach, but should evolve with popular communityparticipation. He declared that the Government intends to implementsuch a grass roots approach, focusingon delivering basic services. He admitted that in the past social sectors were not given sufficientattention. Over the past 40 years, US$20 billion has been allocated to the productive sectors while only US$2.2 billion has been allocated to the social sectors. The Governmentrecognizes that it will be difficult to reverse this trend overnight, but believes that gradual improvementsare possible. He asked the internationalcommunitynot only for material support, but also to continue applying pressure on the Governmentto move in this direction. 64. Dr. Horst Grebe, General Advisorto the Minister of Human Development, diagnosedthe problem, by presenting a comparativeanalysis of the human development  - 15 - conditions. He distinguishedbetween three main problems: the lack of sufficienteconomic expansion;the excessiveconcentrationof wealth; and the social differencesbetween the urban and rural areas. Based on a recently calculatedHuman DevelopmentIndex, Dr. Grebe pointed out that Bolivia ranked 122 out of 133 countries. Of countriesin the region, this ranking was only better than Haiti's, even though Bolivia's level of economicdevelopmentis higher than Haiti's. Dr. Grebe then referred to numerousdismal social indicators, including: low GNP per capita, high illiteracy rates, low levels of access to education, water and basic sanitation, high rates of infant and maternal mortality, and low caloric supply. All indicators are generally even worse for rural areas, indicatinga large gap between rural and urban areas. The economic deteriorationof rural areas has led to high migration to cities, causing further urban impoverishmentand placing heavy demandson urban servicesand employment. 65. Educationand health present especiallycrucial problems. There are high drop-out rates and only 30% of the populationis participatingin the educationalsystem. Educational resources are skewed-universities, with 8% of the total student body, receive most of the budget, while basic education,with 73% of the total studentsreceives only 41 % of the budget. In addition, instructionis often not in the native language of the children. The health sector is plagued with inadequatepreventivehealth care and high infant mortality rates. Health expendituresare very low-US$25/person/year-and have been declining. 66. Dr. Grebe indicatedthat there has been a persistent shortageof low income housing due to a lack of credit and poor cadastre and land titing procedures. Despite a slight improvement,access to basic sanitationis still limited compared to other countries. Although unemploymenthas declined, Dr. Grebe stated the definitionmay be misleading, since manypeople have simply given up searchingfor a job. There is need for new employmentopportunitiesfor the young and a strong social security system for those nearing retirement age. 67. Dr. Grebe called attention to the lack of popular participationdue to the centralized nature of the system. The Governmentintends to address the problem by establishing provincial councils for development,strengtheningmunicipalitiesand strengtheninggrass roots participation. Finally, Dr. Grebe outlined some other major problems in human development:the lack of sectoral coordinationwhich causes a duplication of efforts; the increasing use of credits over concessionalfinancing;the lack of a coherent overall strategy; limited implementationcapacity; and the isolated nature of many projects. 68. Minister Romero described the main componentsof the human developmentprogram which are to receive top priority. In education, coverageis expectedto increase from 58% to 65%, through the transformationof the educationalsystem. In health, the program aims to improve health care coveragein immunization,pre-natal care and nutrition, while decentralizingservices to municipalitiesand reforming the health insurance system. In water and sanitation,coverage will increase and housing constructionwill reach 17,500 houses per year. Finally, the Governmentwill establish labor training programs and will make credit  - 16 - availableto small businesses. To achievethese goals, actions must focus on individuals. The Governmentwill change its priorities and closely coordinateall social sector activities. The reform of the ExecutiveBranch has establishedspecial secretariats for issues concerning women and children. The various funds and NGOs will continue to act as implementing agencies. 69. The National Secretary for Social Investment,Mr. Fernando Ruiz, presented the four- year financingneeds for human development; Education: US$308 million; Health: US$278 million; Basic sanitation: US$210million; Urban Developmentand Housing: US$178 million; Employment,Income and Productivity: US$235 million. Over four years, the total financingrequired is US$1.2 billion, of which 22% will be from domestic sources. The program attempts to integrate popular participationand rural development. To assist the popular participationprocess, the Governmentwill establish the National Commissionfor Popular Participationand a popular participationunit. To promote rural development, provincial developmentcouncils will be created in priority areas. FIS will provide support of US$40 million per year to the EmploymentGenerationand Income program and US$70 million for training and Recyclingof the Labor Force, as well as technical assistance for institutional strengthening. Minister Romero concluded the presentation by stating that if Bolivia invests wisely, it could rank 105th in the Human DevelopmentIndex by 1997. Discussion 70. A member of the World Bank delegationinitiatedthe discussion by commentingon the comprehensivenessof the presentation. Another delegate congratulatedthe Bolivian representationfor the frank and concrete presentation, and inquired how the decentralization process was to be carried out. Minister Romero reiterated the distinctionbetween decentralizationand popular participation, and admitted that the Governmentstill does not have a clear idea about the future role of the RDCs. He indicated that Bolivia will draw lessons from the Mexican "Solidaridad"experienceand will keep the popular participation decree simple, merely as a policy framework. 71. Another participant expressed concern that the program presented did not clearly link human to economic development. Minister Romero replied that the program did not aim at alleviatingpoverty, but rather at giving people the tools to become part of the solution. A World Bank representativeunderscored the importance of "leveling the playing field" and expressed support for the rural developmentapproach because it attacks the problem at the source. One participant enquired about disbursementdelays. Minister Romero responded that, although time had been wasted re-organizingthe administration, the system was operational, although not perfectly. 72. Minister Romero stated that the education reform law will be presented to Congress in January, and that a tremendousbattle is expected, given the power of the teachers' union. One delegate asked about vocational training and Minister Romero responded that students could select vocational training programs. However, he indicatedthat the basic problem is  - 17 - languageand, with the reform, bilingual training will be made available. Another speaker asked about the role of the private sector in vocationaltraining. Romeroreplied that re- training programs will be totally private and that resources will be channelled to private companies to make this possible. On the same topic, one representativeasked whether dual vocationaltraining system would be more appropriate. The Boliviandelegationanswered that SENET and INFOCAL, which currently run such programs, are ineffective.On the issue of health, a participant noted that progress had been made in the reducing infant mortality and expressedconfidencethat the targets could be reached. 73. In the area of housing, a participant remarked that the public sector has wasted resources in the past and suggestedthat new programs should focus on property rights and basic services. He asked for some elaboration on the program. Minister Romero replied that it was difficultto determinethe best level of intervention. The Governmentwill provide subsidizedhousing through forced savings (FONVIS) of about US$5 million per month. He explained that FONVIS would be a bank for credit and it would supervise subsidiesto make sure funds are allocatedappropriately. Minister Justiniano, when asked to comment on the progress of the land titling project, indicatedthat work on the project would begin soon. A participant remarked on the need to implementlegal and institutionalchanges prior to tackling the low income housing shortage. It was also mentionedthat a second-tierlending institutionwould be establishedearly in 1994. 74. Regarding water and basic sanitation,the Governmentreiterated the commitmentto provide the services for those who cannotpay for them. The RegionalDevelopmentFund and FIS will be executingprojects through the municipalities. On employmentand income support, four ongoingprojects were mentioned,providing US$63 million for 40,000 families in rural areas. Minister Romerostated that programs for generatingemploymentare only temporary, until the economy can provide the people with a permanentjob. THE SUSTAINABLEDEVELOPMENT PROGRAM Statement by the Bolivian Government 75. The Minister for SustainableDevelopmentand the Environment,Jose Guillermo Justiniano, opened his statementby mentioningthe recent organizationalrestructuring, the new criteria and priorities, and the change in the implementationapproach. Minister Justiniano noted the inadequacyof the Ministryof Planning model which weakens sectoral ministries by controlling investmentresources. The Governmentnow faces the task of reconciling a market economywith an intelligentstate, responsiblefor redirecting policies and resources. Poverty, inadequate infrastructureand institutionalsupport, and lack of human capital are constraints to change. 76. Bolivia's natural resources are deteriorating,and there is a need for permanent interaction and coordinationon inter-sectoral issues in order to have an integrated approach  - 18 - to sustainabledevelopment. The Ministry of SustainableDevelopmentand the Environment (MSDE)is developingseveral projects and evaluatingenvironmentalconsequences. The agenda of the ministry includes the preservationof forest reserves through reforestation programs and the control of excessiveexploitationof minerals. 77. Mr. MufnozReyes, National Secretary of Natural Resources and Environmental Management, summarized the ministry's reform program, which includes reforming the regulatory and legal frameworkpertaining to land holdings and forest cutting rights. In January, the draft law on land holdingswill be completedand is expected to be passed by August. This law will ensure that property rights are protected and will improve-small farmer access to land. Other bottlenecks,including the lack of an efficientcadastre and adequate informationon land holdings, have also underminedtax collections system and have resulted in the accumulationof land in a few hands. 78. Mr. Muniozthen delineated some of the problems with forest and water resources. Presently the concession terms are too short, the Governmentcannot grant extensions and the agreements are on the basis of usage. This practice leads to exploitation, since it does not provide an incentive to concessionholders. The result is that a new Forestry Law is necessary. Water resources are also in danger from pollution caused by agriculture, industry and mining. Water supplyand irrigation are inefficientand legislation for water resources is obsolete. The Governmentis currently working with Congress and neighboringcountries to establish legislationon water usage. 79. Mr. Muniozalso stressed the importance of biodiversity. Regional and local institutionalcapacity in this area is weak and must be strengthened. The Govemmentwill promote the participationof universities,NGOs and other institutionsto cooperate in the protection of biodiversityresources and a biodiversitybill is being considered. The Governmentis also preparing the legislation to regulate the EnvironmentalLaw of 1992 in cooperation with the mining, agricultural and industrial sectors. 80. The Secretary referred to the country's inefficientterritorial institutionas a major impediment in sustainabledevelopment. He highlightedthe need to create institutional capacity with popular participationand to distribute space according to optimal resource use. The Governmentwill tackle institutionalweaknessby strengtheningall secretariats, sectoral units and municipalitiesand sharing responsibilitieswith other ministries, the RDCs, NGOs, universities and private institutions. It will also provide support to foster popular participationin sustainabledevelopment. 81. Mr. Mufioz closed by explainingthe reforestationprogram. He observed that woods are used excessivelyas a source of energy. If alternativeenergy sources can be developed, for example by exploitingthe water basins in the high areas of the country, the forests can be preserved. The Governmentis looking fora model of sustainableagriculture which supports small farmers and protects the environment. 7T  - 19 - 82. Minister Justinianoconcludedthe presentationby stressing the correlation between developmentand natural resources, especiallythe need to establish new rules for natural resource managementincorporatingefficiency,transparencyand equity. He also emphasized the need to provide incentivesrather than instituteexcessivecontrolsand reiterated the Govemment'sobjectiveswhich include: (a) implementingForestry legislationand long-term concessions;(b) establishingtransparentaccess to land resources for small landholders; (c) installing environmentalmanagementin cooperationwith entrepreneurs,based on specific Bolivianneeds; (d) establishingclear rules for protected areas; and (e) initiating debt-for- nature swaps. In conclusion, he requestedthe assistanceof the internationalcommunity. Discussion 83. A delegateinquired on the territorial aspects relating to indigenousgroups, specificallythe Matacos. Minister Romero commentedon the Government'scommitmentto indigenousissues, as demonstratedby the creation of the Secretariat for Indigenousand Ethnic Affairs. Minister Justinianostressed that the Governmentrecognizes the cultural and ethnic diversity of the country and is committedto granting indigenousgroups equal access to natural resources. On the Matacos issue, he indicatedthat since fish are an essential element of the group's diet, they should be given an area with access to fishing. He expressedconcem about the Pilcomayoriver shared by Bolivia, Paraguay and Argentina. Resources are needed for the river to be managedeffectively. More than one delegation indicatedpleasure with the Government'sefforts, especiallyon issues of the indigenous people, and indicatedthat technicalassistancefunds would be made availablefor this purpose. The delegate from Brazil expressed a desire for cooperationon this issue and stated that the countries are already cooperatingin the Amazonarea. Finally, a participant inquired about the current status of the forest action plan. It was explained that there has been only marginalprogress due to the need to improve data collectionon forests. THE ALTERNATIVE DEVELOPMENT PROGRAM Statement by the Bolivian Government 84. Mr. Gast6n Martinic, ExecutivePresident of FONADAL, presented the Government'sprogram for alternativedevelopment. He emphasizedthe destructiveimpact of coca on the economy, agriculture, environment,alternativecrops and on social stability. The alternative developmentprogram categorizes the targeted surface areas into three groups: (a) areas where coca is grown for traditional therapeuticreasons; (b) transition areas subject to systematicreduction; and (c) illegal areas subjectto total elimination. The struggle against coca is a top priority and the program focuses on three areas: alternative development, prevention of use of drugs, and civil defenseand interdiction. The alternative developmentefforts will include employmentand income generationprograms, opening of internationalmarkets and basic infrastructureprojects. To combat drug usage, treatment and rehabilitation programs will be established. Tax regulationswill be tightened to trace income  - 20 - from illegal activities. The necessary investmentsare calculatedat US$516.1 million. The Govemmentwill also provide the option for debt-for-altemative-development swaps. 85. Minister Illanes noted that a gradual approach to coca eliminationis not sufficient because incentivesare minimal, coca growers remain well-organizedand restrictions are easy to evade in the Chaparre. The Minister underscored the urgency of the situation and the need to conduct a study on the modalitiesand financingof the total coca eradication program. The issues to be analyzed will include public attitudes to drug eradication, realistic compensationamounts, number of affectedfamilies, possibilitiesfor alternativeagricultural and non-agriculturaldevelopment,prospects for enforcing such a program, and macroeconomicimplications. Discussion 86. A participant noted the need to reduce the coca-cocaineeconomyand called for the support of the big donors, includingthe multilaterals,to participate in the proposed study. Another delegate noted the need for comprehensiveregional planning and for coordination between studies. Another delegation expressed satisfactionwith the Govemment's presentation and noted that the root of the problem remains the lack of economic opportunities. The solution lies in creating legitimateopportunitiesand in strengtheninglaw enforcement. Representativesof the multilateralsexpressed concern over this problem and indicated a commitmentto altemative developmentthrough human resource and export developmentprojects. Closing Statement by the Government 87. Minister Illanes requested donor support to help Bolivia complete the process started in 1985 to develop and overcomepoverty (AnnexH). He mentionedGovernmentefforts to consolidateparticipatory democracy and to encourage sustained growth. He classified this as a demandingprocess which requires foreign financingand investment, estimated at about US$3.6 billion over four years. As proof of the Government'scommitmentto implement reform and maintain stability, he referred to the recent agreement negotiated with the IMF and the rationalizationof public enterprise employees. 88. The Vice President of Bolivia, Victor Hugo Cardenas, thanked the representativesand the organizers for their participation(Annex I). He stated that Bolivia faces a challenge in its effort to move towards an equitable society with sustained economic growth. He stressed that the Bolivian people and their needs are at the center of the reform program. Consequently,decentralizationand popular participationare essential. The Vice President referred to the first steps taken by the Government-the executivebranch reform and the preparation of the capitalizationprogram. The selectionof an Indian as a Vice President was cited as evidence of political recognition of the country's cultural diversity and a willingness to change. He concluded by emphasizingthe need for internationaleconomic and political support.  - 21 - 89. The Chairman commentedon the quality of the Bolivianpresentations and declared that if the reforms were successful,Boliviacould face a bright future. AID REQUIREMENTS AND PROSPECTS FOR COOPERATION 90. The participantsoutlined their agencies' assistanceprograms for 1994 and beyond. Ms. ConstanceBernard, ResidentRepresentativeof La Paz, summarizedthe World Bank's program (AnnexJ). She indicatedthat external disbursementsin official aid for 1994 should total between US$550and US$600 million and stressed the continuingneed for concessional resources. 91. Ms. Bernard remarked that IDA commitmentsfor 1994 are expected to be about US$160 million-more than double normal levels-while disbursementsshould reach around US$100 million. IDA support is predicated on a set of assumptions,including the maintenanceof strict fiscal discipline, implementation the macroeconomicprogram agreed of with the IMF, selectionof projects according to strict economiccriteria, a shift away from direct investmentin the productive sectors, and emphasis on strengtheningsocial services and economicinfrastructure. The Bank's program supports povertyalleviation, private sector development(includingthe capitalizationprogram), improvementof the regulatory and legal framework, human resource developmentand environmentallysustainabledevelopment. Human developmentassistancewill be an essentialcomponentof the 1994 program, including education reform and municipaldevelopmentprojects. Ms. Bernard described ongoing operations and programs under preparation, highlightingIDA support for the civil service and judicial reform. She also noted that IFC is expandingits activities in Bolivia and that investmentscould reach US$200-300million in the next few years. 92. Ms. Bernard stressed the need to strengthen the existing frameworkof cooperation with donors, especiallythe importance of co-financingin a time of scarce international resources. Citing the education reform as an example, she indicatedthat close working relationshipsbetween both multilateraland bilateral institutionshave led to a higher quality and more focused developmentprograms. Finally, Ms. Bernard stressed the Bank's continued commitmentto coordinatingand co-financingwith multilateraland bilateral donors. 93. IDB commentedon their recent programmingmission to Bolivia which provided an opportunityto discuss the proposed reform program. The IDB representativesummarized progress achievedin the legal and regulatory area, on the pending creation of a second-tier bank and on compliancewith conditionalityin IDB loans. He expressedIDB's willingnessto support reimbursableand non-reimbursable programs in transportation, agriculture, the social sectors, export diversification,institutionalstrengtheningand tax reform. In 1994, commitmentsare expected to reach US$240million, of which US$55 million is allocated to education and US$45 million to FONVIS and the housing sector. IDB financingfor other  - 22 - projects including the gas pipeline, will depend on the availabilityof concessionalresources and coordinationefforts. 94. The ongoing Multilateral InvestmentFund (MIF) is providing technicalassistance on concessionaryterms to the capitalizationprogram, labor training and microenterprisecredits. Improvementscontinuein the execution of US$498 million loan portfolio, with expected 1994 disbursementsof US$112 million. In closing, the IDB representativeunderscored concern over the scarcity of concessionalresources, unavailabilityof counterpart funds, problems in project procurementand weak institutionalcapacity. 95. UNDP expressedits support for the Government'sconceptualprogram but cautioned for greater detail, control and consistency. UNDP's integratedprogram incorporates municipal strengthening,popular participation,legal and judicial reform and the promotion of non-traditionalexports. In 1994, disbursementsof 9.1 million are expected, of which US$1.5 million will go to a populationprogram and US$6 million will be for food aid. With respect to the coca/drug control program, UNDP stated that they could not provide resources above the US$52 million already committed. They did, however, volunteer to participate in the in-depth study to developa new approach to tackling the problem. 96. The Andean DevelopmentCorporation(Corporaci6nAndina de Fomento - CAD is committedto support Bolivia's efforts by maidng external financingavailable to both the private and public sectors, mostly in the form of co-financing. CAF will also provide technicalassistance in the areas of pension reform, securities, market reform, capitalization, privatization, microenterprise developmentand worker retraining. Half of CAF's lending program is geared towards financingprivate sector projects and trade operations. In 1992, commitmentsreached US$56.0 million and disbursementswere US$40.5 million. In 1993, CAF approved loans amountingto US$92.8 million in the financial,transport, industrial and microenterprise sectors. 97. In 1994, CAF expects to approve loans and equity participationstotaling US$172.0 million with disbursementsof over US$110.0 million. Excluding the Bolivia-Brazilgas pipeline, total loans approved over the next two years should reach over US$350 million with disbursements of US$250 million. CAF's priorities in Bolivia are in the energy, hydrocarbons, infrastructure, financial, social sectors and alternativedevelopment. The representativedescribed some of the projects under implementationand stressed the importance of its flexiblenature and ability to respond quickly. CAF can lend to the private sector; provide funds for a capitalizationand privatizationfund; promote capital market development;finance local counterparts in social and infrastructure projects; and, provide technical assistance in institutionalstrengthening,capitalization, export development, civil service and others. 98. The Netherlands recognized the importance of the reforms presented by the Government, but expressed concems over declining internationalassistance levels. Their overall 1994 budget for Bolivia is US$30 million, of which US$4-6 million are new  - 23 - commitments. The representativeunderlinedthe need for priority-settingon the part of the Governmentin view of the limited capabilityto take on new endeavors. He recommended that more realistic options need to be developed,since Bolivia's absorptive capacity is limited. The Netherlandswill support projects in poverty alleviation, forestry, environment, education, gender issues, income generationand private sector development. He also indicatedsupport for efforts to decentralizeand to foster popular participation. Finally, he urged the Governmentand the multilateralsto deal more with local offices in Bolivia. 99. The United States stated their support for Bolivia's efforts to strengthendemocratic and grass-rootsparticipation. They suggestedthat the pace of reforms should be accelerated and congratulatedthe Governmenton movingquickly in the area of judicial reform. US aid in the period 1988-1992increased by US$600million and disbursed levels remain among the highest in the hemisphere. The United States backs the effortsto expand economic opportunityand access for all its citizens. The United States representativepinpointed controlling the fiscal deficit and increasing exports as two of the key macroeconomic concerns of Bolivia. He stressed the need to invest in physical and social infrastructuresand to develop human capital. The delegate expressed support for continuationof the IMF- backed economic and structuraladjustmentprogram which incorporatespoverty and social concerns. He offered US technical assistancefor the capitalizationprogram and pension reform and described progress towards expandingnon-traditionalexports and openingnew markets for Bolivianproducts. 100. The representativeof the United Statesremarked on the progress in the areas of internationalcooperation,sustainabledevelopment,health care, education reform, and environmentalprotection. He stated that the solutionto coca cultivationand traffickingis broad-based economic growth with equity, aided by altemative developmentprograms. He declared that the United States is pleased with the Govemment'scommitmentto aggressively tackle the coca/cocaineindustry. Estimatedassistance for 1994 will reach approximately US$80 million, of which 50% will be devoted to human development. Disbursementsfrom both new and old commitmentswill reach US$100million. The United States will also continue to provide assistance through the InternationalNarcoticsProgram, the Trade DevelopmentProgram and the Peace Corps. 101. IFAD expressed its approval for the rural developmentefforts. The delegate underlined the importance of indigenouspeople and referred to three ongoingprojects which incorporate indigenousgroups. Projected commitmentsfor 1994 are estimatedat around US$10 million. 102. Switzerlandrecognizedthe difficultyof the challengefacing the BolivianGovernment. After making some general points, the representativestressed the importance of the struggle against poverty and the need to overcomesocial inequalities. He remarked on the difficult fiscal situation facing Bolivia and on the need to expand the tax base and to reduce non- essential expenditures. He emphasizedthe importance of interaction among the three main reform componentsof the reform program and placed priority on the civil service reform.  - 24 - He suggestedthat the donors allow the Governmentfreedom in the selection of programs, but emphasizedthat previous commitmentscannot be dropped with every change in government. 103. Since 1989, the Swiss have provided assistanceof approximatelySWF20 million per year. Balance of Payments (BOP) support reached SWF80 million in disbursementsby 1993 and debt of SWF53 million was forgiven in April of 1993. In 1994, between SWF20 million and SWF25 million will be channelledto agriculturaldevelopment(SWF6 million), natural resource management(SWF3 million), export promotion (SWF4.5 million), civil service (SWF4 million), the FIS (SWF4.5 million)and rural development. Switzerlandis also willing to provide additionalBOP support of SWFIO million. 104. Sweden stated that funds for 1994 are limited, however, they are mainly grants. They commendedthe Governmenton the agenda, but emphasized the need to maintain macro stability and expressed concern regarding fiscal discipline. The Swedish International DevelopmentAgency (SIDA) will provide support in human developmentthrough programs for the urban poor, indigenousgroups, women, education, health, employmentand income generationand civil service. Sweden's Agency for TechnicalAssistance (BS) will provide technicalassistance of US$1.5 million in energy, mining and electricity, while SWEDCORP will help promote trade and investment. Swedenwill also support the UNDCP drug control program. 105. Jap congratulatedthe Bolivian delegationfor the reform program. The delegate stressed the need to continue with previous policies and urged the Boliviandelegation to prioritize programs. He noted that Bolivia was one of the largest recipients of Japanese assistance. In 1992, Japanese aid reached US$87.18 million in grants and loans. He confirmed Japan's commitmentto continue helping Bolivia with BOP support, investmentsin economic infrastructure and human developmentand technicalcooperation. 106. Germany expects to disburse DM100 million during 1994. The representative referred to some of the ongoing projects, includingthe health system of Unata, the road maintenanceproject in Santa Cruz and vocationaltraining programs and suggested that they should be used as models at the national level. He stressed Germany's interest in promoting social sector developmentand decentralization. German assistance has been provided for primary education: DM 50 million in 1992 and DM70 million in 1993 respectively. The German delegate suggested that the Governmentscrutinize current projects and terminate inefficientor inappropriate projects so that resources may be freed for new projects. He recommendedthat the Governmentaccelerate the disbursementsprocedure and indicated interest in participating in debt-for-natureswaps. 107. Canada expressed its confidencein the new Government'sprogram and in its ability to execute the program. Including food aid, Canadian assistance for 1994 will reach approximatelyUS$15 million. The delegate stated that most of the support would be through technologytransfers, technical assistanceand training in productive and in social sectors.  - 25 - 108. PAHO declared its intent to provide assistancein the areas of health, decentralization and the social sectors in general. The delegate spoke of the needs to strengthennational institutionsand coordinationwith NGOs. In 1994, commitmentswill be approximatelyUS$4 million. 109. France's 1993 aid program consistedof around FF45 million, most of which has not yet been disbursed. In 1994, France expects to disburse FF29 million. 110. Brazil and Bolivia have a long-standingrelationshipof cooperation. Next to the United States, Brazil is Bolivia's largest trading partner, with an annual trade volume of US$300 million. The Brazilianrepresentativementionedproblems associated with the gas pipeline, specificallythe shared inability to absorb such large amounts of investmentand the difficultyof raising the required counterpart funds. He also stressed that the pipeline is important in balancing the trade relationshipin Bolivia's favor. He described several cooperationventures between Brazil and Bolivia, includingthe signing of an economic agreement in the Amazonregion and educationalexchanges. He remarked that while Brazil is unable to provide monetaryassistance, it will help Bolivia with technicalassistanceand technologytransfer. 111. UNICE stated that human developmentachievements during the last years should not be underestimated. The delegate confirmedUNICEF's commitmentin 1994 to continue with social programs for women and children, support education and provide poverty alleviation for the poorest areas and income groups. He recommendedthat the FIS counterpart fund procedures need to be simplified. UNICEF's aid program for 1994 is estimatedat around US$11 million, of which US$2 million will be a contributionfrom Canada. 112. The Spanish aid program increased significantlybetween 1992 and 1993 from 150 million pesetas to 500 million. In 1994, Spain's assistanceis estimatedto reach US$40 million primarily in the form of mixed credits. Three fourths of the program will focus on rural development,education, sanitationand tourism. 113. The United Kingdomhopes to maintainthe current level of its assistance- approximately5 million pounds. The representativestressed that funds allocated in 1994 will be mainly for human developmentprograms. Closing Statement by the Chairman 114. The Chairman, Mr. YoshiakiAbe, expressedhis satisfactionthat the Consultative Group had completedthe tasks set at the beginningof the meeting (AnnexK). He commentedon the revolutionarynature of the reform program presented by the Government. The emphasis on state divestiture from the productive sectors and on improving quality basic services for all Bolivianswere mentioned-asimportant.  - 26 - 115. The Chairman noted that Bolivia was unique in giving sustainabledevelopmentand the environmentequal footing with conventionaleconomic and social developmentand by maldng popular participationthe cornerstoneof human development. He stated that the Government'score themes of capitalization,public participationand sustainabledevelopment present a unique opportunityto promote sustainableand equitablegrowth in Bolivia. 116. The Chairman underscored the ConsultativeGroup's consensus that fiscal discipline is essential to sustained growth. He also observed that several of the participants expressed concern over the size of the overall public investmentprogram. He urged the Govemment to establish priorities consistent with realistic assessmentsabout availableexternal resources, the overall fiscal program and absorptivecapacity. 117. The Chairman stressed the need to increase investmentin human developmentin order to improve the quality and coverage of basic social services. He also emphasizedthe importance of increased communityparticipationto allow all Boliviansa voice in determining their futures. Especially for social sector projects, financingshould be on concessional terms. 118. The Chairman acknowledgedthe reform of the executivebranch as a positive step, but stressed the need for greater coordinationamong the ministries. He urged the Govemmentto provide a clear frameworkfor private sector participationto attract the capital and skills crucial to Bolivia's economicand social development. He also recommendedan accelerated implementationof the civil service reform program to improve Government efficiencyand effectivenessand to better manage scarce donor resources. He indicated that the donor communityis committedto improvingdonor coordination, especiallyin education reform and rural development. 119. The Chairman reported that the delegates had committedabout US$1 billion for 1994, most of it in concessionalterms. He reported Governmentestimates of an additionalUS$50- 60 million in commitmentsfrom donors not present at the meeting. These commitments reflect the confidencethe donors have in the Government'sintention to implementthe economic and social programs presented during the meeting. The Chairman closed by proposing to reconvene next year and urged the donor communityto be prepared to increase support.  Annex A December 11, 1993 List of Paricipants WORLDBANK Mr. YoshiakiAbe Chairman Mr. Dennis de Tray Mr. Daniel T. Morrow Ms. Noriko Iwase Mr. Vicente Fretes-Cibils Ms. Deborah Bateman Ms. ConstanceBernard Resident Representative,La Paz EXECU77VEDIRECTOR'S OFFICE Mr. Nicolas Flanjo Executive Director Ms. Jeannette Mercado Advisor to the ExecutiveDirector BRAZIL AmbassadorPaulo-Tarso Flecha-de-Lima Head of Delegation Ambassadorto the United States Embassy of Brazil Mr. Enio Cordeiro Delegate Counselor Embassy of Brazil CANADA Mr. Robert Anderson Head of Delegation CIDA (BMS) SA Division Mr. Paul Chambers Head of AID, Peru/Bolivia Mr. Jack Adams First Secretary, AID/La Paz FRANCE Mr. Jean-Paul Trucy Head of Delegation Financial Attache French Embassy, Washington, D.C. Mr. Jean-Pierre Laclau Commercial Counselor French Embassy in Bolivia GERMANY MIr.Josef Hansen Head of Delegation Federal Ministry for Economic Cooperationand Development (BMZ) Mr. Wolfgang Wipplinger Kreditanstalt fur Wiederaufbau JAPAN Mr. Kenko Sone Head of Delegation Economic Officer Embassy of Japan Mr. Kazuo Kobanyashi Assistant to Executive Director NEIHERLANDS Mr. Joan Boer Head of Delegation Head of Ministry's South America Section DevelopmentCooperation Latin America Dept. Ministry of Foreign Affairs Mr. Norbert Braakhuis Charge d'Affaires, a.i. The Royal NetherlandsEmbassyin La Paz SPAIN Mr. Angel Torres Head of Delegation ExecutiveDirector World Bank Ms. Rosa Puech Assistant to ExecutiveDirector SWEDEN Mr. Boije Mattsson Head of Delegation Deputy Assistant Under-Secretary Ministry of Foreign Affairs Department for InternationalDevelopmentCooperation Mr. Lars Ronnas Head of Section, Ministry of Foreign Affairs Department for InternationalDevelopmentCooperation Mr. Jan Roberts Head of Section SIDA Mr. Goran Norgren SIDA Representative La Paz, Bolivia SWIZERLAAD Mr. Adrian Schlapfer Head of Delegation Chief Latin America Section Swiss DevelopmentCorporation Mr. Thomas Zeller Resident Coordinatorin La Paz/Bolivia Swiss DevelopmentCorporation UNITEDKINGDOM Mr. Barry Moorhouse Head of Delegation Latin America, Caribbean & AtlanticDepartment, OverseasDevelopmentAdministration(ODA) UNI=TE STATES Mr. Mark Schneider Head of Delegation Assistant Administrator Latin America and Caribbean Bureau U.S. Agency for InternationalDevelopment(USAID) Ms. Norma Parker Deputy Assistant Administrator USAID Mr. Carl Leonard Mission Director USAID, La Paz Ms. Leslie Wilson International Affair Officer Office of RegionalEconomic Policy U.S. Department of State Mr. Daniel Strasser Chief, Andean/SouthAmerica Division Bureau of InternationalNarcotics Matters U.S. Department of State UNITED STATES (Continuation) Ms. Sharon Epstein Bolivia Desk Officer, USAID CORPORACION ANDINA DE FOMENTO (CAF) Mr. Victor Traverso Head of Delegation OperationsManager Mr. Hernan Escudero Bolivia Office Representative Mr. Rodolfo Castillo Officer in the CAF's BolivianOffice INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT Mr. Theodore van der Pluijm Head of Delegation Director, Project ManagementDepartment InternationalFund for AgriculturalDevelopment (IFAD) INTER-AMERICAN DEVELOPMENT BANK (IDB) Mr. Carlos Ferdinand Head of Delegation Deputy Manager, Region I OperationsDepartment (OPS) Mr. Sergio Jara-Duhalde Division Chief for Bolivia, OPS Ms. Betty Rice Coordinatorfor Bolivia, OPS INTER-AMERICAN DEVELOPMENT BANK aDB) (Continuation) Mr. Raul Boada Alternate Director Ms. Johann Schmalzle Representativein Bolivia Mr. Gregory Pokorny Special Advisor Office of External Relations Advisor (EXR) Mr. Richard Archi Chief, Programming Division 2 Department of Plans and Programs (DPL) Mr. Felix Kasamatsu Coordinator Cofinancingand Special Funds Operations Department Ms. Nancy Jesurun-Clements Programming Officer for Bolivia, DPL Mr. Jaques Trigo Chief, Country EconomicsDivision Department of Economic and Social Development(DES) Mr. Martfn Bes Country Economist for Bolivia Country EconomicsDivision, DES Mr. Javier Le6n Economistfor Bolivia, Project Advisory Office Department of Project Analysis (PRA) Mr. Mario Loterszpil Financial and InstitutionalAnalyst Education and Health Division, PRA Mr. Stephen Doherty Education Specialist Educationand Health Division, PRA INTER-AMERICAN INSTITUTE FOR CORPORATION ON AGRICULTURE (aICA) Mr. David Black Head of Delegation Representativeto the USA INTERNATIONAL MONETARY FUND (IMF) Ms. Patricia Brenner Head of Delegation Deputy Division Chief Pacific Division, Western Hemisphere Dept. Mr. Toma Gudac Desk Officer for Bolivia Ms. Mitra Farahbaksh Economist Mr. Martine Guerguil Economist PAN AMERICAN HEALTH ORGANIZAI7ON (PAHO) Dr. Irene Klinger Head of Delegation Chief, Office of External Relations PAHO, Washington, D.C. Dr. Mirta Roses PAHO/WHO, Representativein Bolivia Mr. Francisco Xavier Solorzano Division of Health and Development PAHO, Washington, D.C. UNITED NAT7ONS DEVELOPMENT PROGRAM (UNDP) Mr. Walter Franco Head of Delegation Resident Representativein Bolivia Mr. Antonio Vigilante Deputy Resident Representativein Bolivia Mr. Gilberto Flores Chief, Division I, RegionalBureau for Latin America and the Caribbean UNITED NATIONS INTERNATIONAL DRUG PROGRAM (UNDCP) Mr. Sandro Calvani Head of Delegation UNDCP Country Director, La Paz UNITED NATIONS INTERNATlONAL CHILDREN'S FUND (UNICEF) Mr. Alan Court Head of Delegation Resident Representative UNICEF, La Paz Mr. Ado Vaher UNICEF New York Office BOLIVIAN DELEGATION Ing. Fernando Illanes Ministro de Hacienda y Desarrollo Econ6mico Lic. Fernando Romero Ministro de Desarrollo Humano Lic. Jose Guillermo Justiniano Ministro de Desarrollo Sostenibley Medio Ambiente Lic. Fernando Cossfo Secretario Nacional de Hacienda Dr. Horst Grebe Asesor General del Ministro de Desarrollo Humano Lic. Fernando Ruiz SecretarioNacional de Inversi6n Social Minieterio de Desarrollo Humano Ing. Jaime MuniozReyes Secretario Nacional de Recursos Naturales y Gesti6n Ambiental Ministerio de Desarrollo Sostenible _ ,, 4 __~~~---- BOLIVIAN DELEGATION (Continuation) Lic. Mario Reyes Chavez Secretario Nacionalde RelacionesEc6nomicasIntl. Ministerio de RelacionesExteriores y Culto Lic. Marcelo M6ndez Subsecretariode Inversi6n Publica y Financiamiento Ministerio de Hacienda Lic. Gast6nMartinic Presidente Ejecutivode FONADAL Mr. Juan Brun Asesor, FONADAL Lic. Pedro Mercader Asesor del SecretarioNacional de Hacienda Ms. Margaret Anstee Advisor Ministerio de Desarrollo Humano BOLIVL4N EMBASSY AmbassadorAndr6s Petricevic Ambassadorto the United States Mr. Luis Fernando Gonzalez Ministro Consejero Mr. Gonzalo Bernal Consejero Comercial Mr. Miguel Lopez ConsejeroEcon6mico Mr. Miguel Papadopoulos Consejero Comercial  Observers DENMARK Mr. Lars Kjaer Counselor (Economic) Royal Danish Embassy ITALY Ms. Antonella Laeri Assistant to the Italian ExecutiveDirector newbolcg.lst JBCoffier/MACervantes December 11, 1994 _I  Annex B CONSULTATIVE GROUP MEETING FOR BOLIVIA Washington, D.C., December 9-11, 1993 CHAIRMAN'S OPENING SPEECH Distinguished Delegates, Ladies, and Gentlemen: Welcome to the eighth meeting of the Consultative Group for Bolivia. My name is Yoshiaki Abe, and I will serve as the Chairman of this meeting. I would first like to extend a warm welcome to the distinguished members of the Bolivian delegation, and in particular to the Honorable Fernando Illanes, Minister of Finance and Economic Development, the Honorable Fernando Romero, Minister of Human Development, and the Honorable Jose Guillermo Justiniano, Minister of Sustainable Development and the Environment. I would also like to express my great appreciation to the representatives of donor governments and international organizations for your participation in this forum. In the meetings today and tomorrow, the Government team will give us an overview of the Bolivian economy. Staff from the represented multilateral and bilateral organizations will provide their assessment of Bolivia's program and describe their respective roles. In my opening remarks, I would like to share with you my own perspective on why this eighth Consultative Group meeting is particularly important, and why Bolivia is especially deserving of your support this year. Bolivia is unique in Latin America -- it is perhaps unique in the world. Although among the poorest countries in the western hemisphere, it is the only country in that hemisphere which has embarked upon and sustained a process of economic and social reform through three democratic governments. Moreover, during the past eight years, Bolivia has consolidated and strengthened democratic institutions and processes. As a consequence, the process of reform is buttressed by social and political consensus. The rewards of this process are clear -- low inflation and steady economic growth, despite a hostile international environment in recent years characterized by drastic declines in prices and demand for the country's major exports. At the same time, Bolivia has been able to maintain a social stability which is the envy of many other countries. Some of you were in Paris during the Consultative Group meeting in 1986. I am sure that you are as struck as I am by how profoundly the country has changed in the intervening years. This impressive success, however, should not obscure the serious structural and social problems which Bolivia continues to "confront. Economic dependence on a few primary commodities has lessened, but is still too high. Steady economic growth has been achieved but at levels well below those hoped for, reflecting both declining prospects for traditional exports and slow progress on the restructuring of the country's most important productive sectors. And, on the social side, much remains to be done. Although social indicators have improVed in the last 10 years, Bolivia continues to suffer from some of the worst social conditions existing in countries of comparable income. The last eight years have provided a basis to address these problems, but radical efforts are now required. The last eight years have provided a basis to address these problems, but profound and radical efforts are required. Last month, I accompanied Lewis Preston, President of the World Bank, on a visit to Bolivia. During our stay, we met with President Sanchez de Lozada and with the ministers who are with us today. At the end of our visit, I asked Mr. Preston for his impressions of the new administration. He said, "This president is a revolutionary, and that is what is needed." Indeed, the new government does aim at dramatic social and economic transformation of the country. It is an original and ambitious program, one that will require discipline and focus -- and strong international support -- if it is to succeed. Bolivia now faces a both a great opportunity and a great challenge. It has the opportunity to make changes in the quality of its public sector that will accelerate growth and improve basic social services, living conditions and incomes for the majority of the population. It faces the enormous challenge of moving quickly to allocate its scarce financial and managerial resources to the critical first steps along its chosen road to development. Most of the countries and agencies represented here today have been supporting Bolivia generously since the beginning of its reform efforts. Some of you are facing difficult budget limitations and competing demands for your scarce funds. Despite these pressures, I hope that you also recognize this special moment of opportunity for Bolivia and will maintain and strengthen your support. Before I yield-the floor to Minister Illanes, a few housekeeping matters.  Annex C REUNION DEL GRUPO CONSULTIVO DISCURSO DE APERTURA MINISTRO DE HACIENDA Y DESARROLLO ECONOMICO SR. FERNANDO ILLANES Washington, Diciembre 9, 10 y 11, 1993  DISCURSO DE APERTURA SR. FERNANDO ILLANES MINISTRO DE HACIENDA Y DESARROLLO ECONOMICO GRUPO CONSULTIVO WASHINGTON D.C., DICIEMBRE 9-11, 1993 I. INTRODUCCION Deseo agradecer, a nombre del Gobierno de Bolivia, su presencia en esta reuni6n del Grupo Consultivo, y de manera especial a los personeros del Banco Mundial, quienes, atendiendo nuestra solicitud, tuvieron la dificil tarea de organizar este evento en un lapso muy corto. Esta ocasi6n adquiere caracteristicas singulares, debido a que, partir de agosto de este afio, una nueva administraci6n, bajo la presidencia de Dn. Gonzalo Sanchez de Lozada, es responsable de conducir el Estado boliviano. La nueva administracion tiene el prop6sito de continuar y profundizar el proceso de cambios estructurales iniciado en 1985. Para ello, pretende impulsar en los pr6ximos cuatro aflos un ambicioso programa de reformas trascendentales, con el fin de promover el crecimiento equitativo y sostenible, cuyo objetivo central es mejorar el bienestar de la poblaci6n en su conjunto. II. El AJUSTE MACROECONOMICO Y ESTRUCTURAL Como ustedes bien recuerdan, era dificil imaginar hace menos de diez aftosun pais con mayores problemas y menores posibilidades de recuperaci6n que Bolivia. Graves conflictos sociales, alimentados por un proceso inflacionario sin precedentes en el Continente, habian virtualmente paralizado las actividades productivas. El pals acumul6 hasta 1985 una deuda externa que representaba mas del 75% del PIB y el servicio de capital e intereses por esta obligaci6n representaba, en 1984, mis del 47% de sus exportaciones, superando en exceso la capacidad de pago y de ahorro interno. Se habian sacrificado los primeros anos de la d6cada con fitiles y violentos cambios politicos, en medio de una alta inestabilidad social, con el resultado, de cuatro aflos consecutivos de tasas negativas de crecimiento, la acumulaci6n de altos Indices de desempleo y la aparici6n de focos de miseria; Indices premonitores de violencia social. En esas condiciones, en 1985 el Gobierno Constitucional del Presidente Victor Paz Estensoro ejecut6 un conjunto de medidas, destinadas a controlar la inflaci6n, reducir el d6ficit fiscal, racionalizar el aparato del Estado, abrir la economia nacional a la competencia y renegociar y reducir la deuda externa. Estas medidas fueron calificadas como el programa de ajuste estructural en democracia mas radical y m&s exitoso.  2 Es cierto que estos logros tuvieron un elevado costo social. En aguellos momentos apelamos al apoyo y al sacrificio de la poblacion para hacer posible la recuperaci6n econ6mica. Muchos de quienes hoy integramos el Gobierno Nacional tuvimos la satisfacci6n de conformar el Gobierno del Presidente Paz Estensoro, siendo participes de las decisiones que en el aquel tiempo se tomaron. Lo hicimos convencidos de que, si no imponiamos un ajuste, los efectos de la crisis serian aun mas devastadores e injustos para la poblaci6n de menores ingresos. Un hecho destacable fue que, en tan adversas circunstancias, se afianz6 la democracia. La concertacion politica posibilit6 que se dictaran importantes leyes destinadas a introducir refoarmas en materia tributaria; iniciar el proceso de privatizaci6n; mejorar la fiscalizaci6n de las entidades gubernamentales; hacer mas propicio el ambiente para la inversi6n privada; y mejorar el proceso de selecci6n de las principales autoridades. Sentimos el legitimo orgullo de haber avanzado un importante tramo en el camino hacia la superaci6n de tan graves problemas. Es preciso, en justo reconocimiento, compartir esta satisfacci6n con aquellos representantes de la comunidad internacional que, en el momento mas critico, respaldaron los programas de ajuste y las decisiones trascendentales que tuvimos que adoptar. Tan profunda fue la huella que dejamos, que las directrices de la Nueva Polltica Econ6mica formulada en 1985 se mantuvieron a pesar del cambio de la administracion de Gobierno en 1989. Este rasgo le di6 la continuidad necesaria para enraizar en nuestra naci6n la esencia de la economla social de mercado. II. LA SITUACION ACTUAL Y LOS DESAFIOS DEL PRESENTE Sin embargo, estamos conscientes de que todavia el atraso y la pobreza siguen siendo problemas algidos para una gran parte de la sociedad boliviana. La ausencia de adecuadas condiciones de vida es la caracterlstica mas sobresaliente, de modo particular en las poblaciones rurales e indigenas. El retraso en la integraci6n de los grupos etnicos al conjunto social del pals, tiene implicaciones negativas en el desarrollo econ6mico, en la justicia social y, por consiguiente, en la estabilidad politica. En Bolivia, asi como en otros palses, las desigualdades sociales constituyen el mas insoslayable reto de la lucha contra el subdesarrollo. Las principales restricciones que nos impiden superar la dramfitica realidad en que vivimos son: la crisis institucional y moral del Estado, la deficiente atenci6n de la educaci6n y la salud, la insuficiente infraestructura fisica, el estancamiento econ6mico y el deterioro en la calidad de vida y del medio ambiente. Superar estos obstaculos implica un proceso contin0o de transformaciones  3 estructurales, cuyos resultados se los ira percibiendo con mayor nitidez con el paso del tiempo. La crisis institucional y moral del Estado El sector pfiblico se caracteriza por una alta e ineficiente participaci6n en la produccion de bienes y servicios; una organizaci6n altamente politizada y debil para hacer cumplir las normas; un aparato burocratico hipertrofiado, basado en la discrecionalidad y desprestigiado por la corrupci6n; y un excesivo y asfixiante centralismo. Todos estos factores determinan perdidas en la asignaci6n de recursos, dificultan la gobernabilidad e impiden promover las inversiones y el crecimiento econ6mico. Por otra parte, el sistema juridico es contradictorio, anticuado y obsoleto. Asimismo, la administracion de la justicia es poco confiable y sumamente lenta. Ambas situaciones generan un cuadro de inseguridad e impunidad, que constituye un fuerte impedimento para el desarrollo nacional y, en particular, para la atracci6n de inversiones. La postergacifn de la educaci6n y la salud El avance de los palses en un mundo competitivo y de economias globalizadas, depende-cada vez mas de la calidad de sus recursos humanos gue de su abundancia en recursos naturales. Sin embargo, las graves deficiencias nutricionales, las condiciones precarias de salud y el reducido acceso de la poblaci6n a los sistemas de educaci6n han determinado que el capital humano en Bolivia sea un recurso escaso. Asimismo, estos problemas han dado origen a que los sectores postergados de la poblaci6n tengan pocas oportunidades de aumentar sus ingresos y no vislumbren mejores perspectivas de vida para sus hijos; lo que da lugar a un circuito cerrado que tiende a acentuar la pobreza y acrecentar las diferencias en la distribuci6n de la riqueza. La educaci6n formal en Bolivia presenta problemas tan agudos que no le permiten responder a-las exigencias del mundo actual; ademas de una baja asignaci6n de recursos para la educaci6n, se constata un gasto improductivo que reduce todavia mas la efectividad del sistema y que impide ampliar su campo de accion. Si bien se ha avanzado bastante en los indicadores basicos de salud, por ejemplo disminuyendo la tasa de mortalidad infantil y el aumento en la expectativa de vida, el pals esta lejos de alcanzar cotas aceptables, aun si se las compara con otras naciones de la regi6n. Ademas, s6lo el 20% de la poblaci6n tiene acceso a la  4 salud previsional, cuyos servicios son bastante precarios. El estado de la salud esta estrechamente ligado a la provisi6n de servicios como agua potable y saneamiento. Al respecto, s6lo el 25% de los hogares tiene acceso a los sistemas de alcantarillado y Znicamente un 57% de la poblaci6n de ciudades con menos de cincuenta mil habitantes tiene abastecimiento de agua potable. Estos indicadores ocultan un problema mas agudo en las areas rurales. En un reciente estudio de las Naciones Unidas sobre Desarrollo Humano, nos encontramos ubicados en el preocupante lugar 122, entre las 173 naciones analizadas y en el 6ltimo escal6n del Continente. La insuficiencia de infraestructura fisica La inadecuada infraestructura de transportes y comunicaciones, atenta contra la integraci6n nacional y desalienta las exportaciones y la inversi6n privada, al elevar en forma desmedida los costos de transporte. Las carencias en infraestructura dificultan la explotaci6n racional y sostenible de los recursos naturales y el acceso a los principales mercados. Casi la totalidad de los servicios de transporte, comunicaciones, energia el6ctrica, agua potable, saneamiento, y servicios de almacenamiento y custodia, son proporcionados y administrados por las empresas plblicas. La ineficiencia que rodea su prestacion y la carencia de servicios basicos en extensas zonas del pals, nos coloca en situaci6n desventajosa frente a otros paises de la regi6n. Tampoco existen marcos que regulen y permitan el funcionamiento adecuado de estos mercados en manos privadas. Estancamiento econ6mico El crecimiento econ6mico observado en los Ciltimos aflos, ha sido insuficiente para colmar las necesidades de empleo e ingresos de la poblaci6n y menos para mejorar las condiciones en que vive la mayoria de los bolivianos. La urgencia de alcanzar un mayor crecimiento encuentra su principal dificultad en las bajas tasas de inversi6n, limitadas por el exiguo ahorro interno. Ademas, esta situaci6n adolece de muchas restricciones, algunas ya sefialadas, que estamos superando con decisiones firmes en la reforma administrativa. Entre ellas, se destaca el prop6sito de reducir el d6ficit fiscal al 3% del PIB, en 1994, seguir una politica austera de gasto y aumentar las recaudaciones. La labor que se realiza en esta direcci6n ha permitido llegar a un nuevo acuerdo con el Fondo Monetario Internacional.  5 Pero otras condiciones, de Indole externo y fuera de nuestro control, perjudican de modo significativo los esfuerzos hasta hoy desplegados. Es el caso del deterioro de los terminos de intercambio, como consecuencia de la caida en la cotizaci6n de nuestros principales productos de exportacion. En particular ha causado un impacto imprevisto e indeseable la baja en los precios de los minerales, que disminuyeron en t6rminos reales a niveles sin precedentes, menores que en la gran recesi6n de los 30, reflejando nuestra dependencia en las exportaciones de materias primas. Esta disminuci6n fren6 el impulso exportador y determino que, a pesar de aumentar en volumen, el valor total de las exportaciones registre un descenso, contribuyendo -junto al crecimiento de las importaciones- a aumentar el deficit de nuestra balanza comercial. Los factores externos y el insuficiente crecimiento econ6mico han sido las causas principales de un aumento en la desocupaci6n. La situaci6n laboral actual se expresa en inestabilidad, bajos salarios, reemplazo paulatino del empleo permanente por el eventual, aumento de la subcontrataci6n de la mano de obra e incremento en los indices de la informalidad. El deterioro en la calidad de vida y del medio ambiente Paralelamente, la ausencia de normas claras y eficientes para preservar el medio ambiente y explotar de manera adecuada nuestros recursos naturales ha dado como resultado, una explotaci6n poco racional, determinando su deterioro. Esta situaci6n ponen en peligro las posibilidades de un desarrollo sostenible y arm6nico. IV. EL PROGRAMA DE GOBIERNO Frente a esta desalentadora lectura de la realidad nacional, no existe lugar para dilaciones ni timideces y, por ello, estamos plenamente dispuestos y preparados para tomar medidas radicales, como se ha demostrado con la aprobaci6n, recientemente, de la Reforma del Poder Ejecutivo y la reestructuracion de las empresas estatales. Ratificaci6n de Objetivos El nuevo Gobierno, a partir del reconocimiento de los problemas considerados y en la perspectiva de mejorar sustantivamente las condiciones de vida del pueblo boliviano, se ha propuesto impulsar el desarrollo a trav6s de un din&mico proceso de crecimiento econ6mico, sostenible y equitativo. La viabilizaci6n de este proceso, en un marco de estabilidad econ6mica, se apoya en los siguientes objetivos:  6 Aumentar de manera significativa el ahorro y la inversi6n; Expandir las exportaciones; Impulsar el desarrollo agropecuario y rural; Transformar la educaci6n, la salud y los servicios basicos; Preservar el medio ambiente y manejar adecuadamente los recursos naturales; Modernizar el Estado y Aumentar la participacion popular. Ante todo, es necesario puntualizar que el primer y central objetivo del Gobierno es buscar el beneficio de toda la poblaci6n boliviana, con mayor 6nfasis en los segmentos mas desposeldos y vulnerables. Es, por tanto, nuestra mayor preocupaci6n atender al conjunto social en sus legitimas demandas, particularmente, la necesidad de mas y mejores empleos, pues se trata de un derecho ciudadano y de ofrecer fuentes dignas y ttiles de sustento para miles de familias; y, al mismo tiempo, es imperativo mejorar sustancialmente la educaci6n, la salud y los servicios basicos, en la bcsqueda de ofrecer perspectivas mas alentadoras de vida. Pero el eje vertebral de todo el andamiaje social es, en definitiva, el incremento de las inversiones y la generaci6n de riqueza. Despu6s de estudios y discusiones, llegamos a la conclusi6n de que la estructura estatal era inadecuada para encarar con posibilidades de 6xito un desaflo como el que nuestra sociedad esta exigiendo. Fue este el motivo por el cual la acci6n mas importante, en la intenci6n de modernizar el Estado, fue la Reforma del Poder Ejecutivo, mediante la aprobaci6n de una Ley, que responde a la necesidad de adecuar el aparato administrativo al nuevo rol que debe asumir en el proceso de desarrollo. Reduciendo a 10 los 17 ministerios que existian, centralizando la administraci6n de todo el sector econ6mico en un ministerio, todo el sector social y humano en otro y creando los ministerios de Justicia y de Desarrollo Sostenible y Medio Ambiente, que reflejan la particular preocupaci6n de 6sta administraci6n en estos campos. La concepci6n ha estado centrada en transferir a la sociedad civil las actividades de produccion y atender las necesidades de la ciudadania en el area social, asi como establecer marcos regulatorios que garanticen que los beneficios de la inversi6n privada y la conservacion del medio ambiente se transformen en mayores niveles de bienestar para la mayoria de la poblaci6n boliviana. Dicho de esta manera suena facil, pero deseo advertir que el cambio realizado en los primeros tres meses de gesti6n es el cambio de administracion mas profundo que se ha producido en toda la historia de nuestro pals.  7 Al mismo tiempo, hemos asumido el costo social que significa reordenar las empresas pablicas, bajo criterios de racionalidad en su funcionamiento. Severas criticas y tenaces oposiciones tuvieron que ser superadas para que se imponga el criterio que sustentamos; pero en todos los casos fueron el diflogo y la concertaci6n los instrumentos democraticos a los que acudimos. Es ahora, entonces, que podemos decirles con plena confianza que los mecanismos administrativos han sido afinados para ofrecerles planteamientos concretos e instrumentos eficientes que desarrollaran esos planes. Es la senal que queremos enviar a los financiadores externos, a quienes todavia tengo reservado un sorprendente dato en el cierre de mi exposici6n. De forma simultanea a la tarea de conseguir fuentes externas de financiamiento, estamos incentivando el ahorro interno, dirigiendo al mercado los recursos disponibles e incitando a la competitividad para lograr una baja en las tasas de inter6s del sistema bancario. Reformas del 8istema de Pensiones de la Beguridad Social y del Sistema Financiero Dada la critica situaci6n del Sistema de Pensiones boliviano, su reforma es de crucial importancia. Esta acci6n permitira brindar una renta digna a la poblaci6n jubilada, a trajes del proceso de capitalizaci6n que creara un sistema universal de pensiones que resultara en una mayor tasa de ahorro, y generara significativos efectos econ6micos, al incrementar el ahorro interno y fortalecer el mercado dom6stico de capitales. Esta transformaci6n, sustentada en los principios de universalidad, y equidad, tiene como objetivo de corto plazo corregir el mal manejo del actual sistema y, en el mediano y largo plazo, mejorar los servicios provistos por los fondos de pensiones, ampliar la cobertura y promover el ahorro a largo plazo, mediante una estricta supervisi6n del empleo de los fondos provenientes de los aportantes. Se continuara con las reformas del sistema financiero, con el fin de incrementar el ahorro interno, mejorar los niveles de intermediaci6n, reducir las tasas de inter6s y elevar la eficiencia. Para ello se pondra en plena vigencia y se reglamentara la Ley de Bancos, ademas de promulgar las Leyes de Valores, Seguros y del Banco Central. Inversion Sectorial Aunque ya se ha mencionado la profunda reforma del Poder Ejecutivo, es pertinente destacar que tres pilares sustentan la nueva  S orientaci6n: el desarrollo econ6mico, el desarrollo humano y el desarrollo sostenible. Notese que la innovadora estructura responde, atiende y armoniza tres factores esenciales e interrelacionados en el escenario del mundo actual. En efecto, es practicamente imposible concebir el avance econ6mico sin atender los asuntos sociales y viceversa. De igual manera, la preservaci6n y manejo sostenible de los recursos naturales es un imperativo del planeta, para tener opciones futuras de crecimiento econ6mico y justicia social. Vemos, pues, que el cambio estructural del Estado obedece a criterios pragmaticos. Es asimismo destacable que se hubiese instaurado un Ministerio de Justicia, pues si el orden establecido no encuentra vias de aplicaci6n uniforme e imparcial, nada habremos avanzado; seguiremos en ese viejo dilema entre la "letra muerta" de la Ley y las distorsiones en su cumplimiento. La reforma del Poder Judicial tiene el prop6sito de garantizar la adecuada administracion de justicia, que debe instituirse como un derecho inalienable de todo ciudadano, en forma independiente a su credo, posici6n econ6mica, politica o social. Es, asimismo, un elemento de inobjetable relevancia para asegurar un ambiente confiable para el inversionista privado, sea nacional o extranjero. Si bien el marco juridico es muy importante, tenemos la certeza de que las imposiciones, los mandatos que no emergen de un proceso de consulta, soportaran resistencia en la practica cotidiana. Por ello hemos decidido cerrar esa brecha tan ancha que hasta el presente ha separado a los gobernantes de los gobernados. La Participaci6n Popular y la Descentralizaci6n, son dos acciones incluidas en las metas de corto plazo. Participaci6n Popular y Descentralizaci6n Desde nuestra perspectiva, la inica forma de cumplir los profundos cambios estructurales que lnos proponemos, es promover la participaci6n de la poblaci6n, tanto en el diseho como en la puesta en practica de las politicas sociales. La comunidad guarda una inexplotada veta de conocimientos practicos, que ayudaran a definir los servicios requeridos y a fiscalizar su ejecuci6n. Por ello, se dotara de mecanismos de activa concurrencia y control social, a partir de las estructuras comunitarias, urbanas y rurales, que contribuyan a reforzar la democracia. El aserto de que se gobierna mejor de lejos pero se administra mejor de cerca, nos permite fundamentar el prop6sito de promover mecanismos regionales de participaci6n. Las diversas y hasta disimiles realidad-s que se presentan a lo largo y ancho del territorio naciona. hacen no s6lo deseable sino necesario que el enfoque especifico de cada regi6n sea considerado de forma  9 independiente, por supuesto sin desmedro de los grandes objetivos comunes. Ambos elementos, la participaci6n popular y la descentralizaci6n, nos permiten ver con optimismo el cumplimiento de todos los programas que desarrollaremos, principalmente en el campo de la acci6n social, pues nadie mas apto que los propios ciudadanos para determinar la prioridad de los proyectos y garantizar su fiscalizaci6n. En Ciltima instancia, son ellos mismos quienes sufren a diario las falencias en los servicios basicos, en la atenci6n de la salud, la educaci6n, etc. Para mejorar las condiciones de salud de la poblaci6n, se realizara un cambio acelerado y sostenido en la provisi6n de estos servicios, que permita garantizar la atenci6n primaria y darle mayor accesibilidad. Tambi6n se aplicar&n programas dirigidos a reducir los elevados niveles de desnutrici6n infantil, a tiempo de aumentar y mejorar los servicios de agua potable y alcantarillado, en el campo preventivo. El sistema educativo ser& reformado para elevar la cobertura de atenci6n de los servicios, superar su calidad, lograr una mayor eficiencia en el uso de los recursos humanos, materiales y financieros. Paralelamente, se fortalecera la capacidad institucional que permita ejecutar, evaluar y controlar esta reforma. La uni6n de esfuerzos entre la comunidad y el Estado es lo que buscamos para que los cr6ditos destinados a corregir estas carencias sean bien administrados. En cuanto a la inversi6n y el desarrollo econ6mico, el objetivo es incrementar la producci6n de bienes y servicios, tanto en el rango de oferta como en calidad. Si logramos salir airosos de la dura confrontaci6n con la competencia en los mercados externos, sabemos que tambi6n estaremos beneficiando al consumidor domestico. Otro efecto buscado es reducir la diferencia entre lo que vendemos y lo que compramos. La balanza comercial de nuestro pals muestra una brecha desfavorable que no se podra soportar a mediano plazo. Expansion de las exportaciones no-tradicionales Por su directa relaci6n con la generaci6n de nuevas y mejor pagadas fuentes de trabajo asi como su impacto macroecon6mico, el incremento de las exportaciones constituye uno de los aspectos medulares del Programa de Gobierno. Para impulsar su expansi6n seran concluidos los corredores de exportaci6n, mejorando nuestras rutas al Atlantico y al Pacifico y afnadiendolas vias de conexi6n a la Argentina, al Brasil, al Paraguay y al Peru  10 TambiOn se aplicara una activa promoci6n para las exportaciones no tradicionales, en especial aquellas de intensivo empleo de mano de obra y que sean capaces de soportar las tarifas de flete aereo en condiciones de competitividad. Igualmente, se incorporara el turismo receptivo y se concretara la exportaci6n de gas a la Rep6blica del Brasil, que representa uno de los proyectos mas importantes para la integracion sub-regional y para la preservaci6n del medio ambiente. Esta estrategia es crucial si tenemos en cuenta el desfavorable efecto que la baja en los precios de nuestros principales productos de exportaci6n han registrado, erosionando los t6rminos de intercambio, ya que la coca parecer ser la Onica demanda con mercado mundial asegurado y precio relativamente estable. Adem8s, si tenemos en cuenta nuestros 500 ahos de historia que demuestra una irracional explotaci6n de nuestros recursos naturales, seguimos siendo en gran proporci6n simples proveedores de materias primas y, lo que es mas doloroso, aparte del dafhoa la madre tierra estamos soportando una presi6n que nos induce hacia la p6rdida de los valores morales. Desarrollo agropecuario y rural La importancia econ6mica y social del sector agropecuario y rural, incluyendo el desarrollo sostenible del recurso forestal sostenible, ha determinado que se le preste singular atenci6n, con el objeto de elevar sus grados de rendimiento y mejorar los ingresos de los productores del agro. Se ampliar8 la asistencia t6cnica, la infraestructura de apoyo productivo, las vias de comercializaci6n y la frontera agricola. Se efectuaran acciones para reducir los riesgos provocados por contingencias climaticas y seran puestos en ejecuci6n programas para recuperar las Areas degradadas. Uno de los aspectos que merecerl especial enfasis sera el relacionado con los derechos de propiedad de la tierra, para lo cual se ofrecer8n soluciones definitivas que permitan al productor acceder con mayor facilidad al cr6dito, transferir sus pertenencias o buscar nuevas formas de asociaci6n y, en suma, aumentar su capacidad productiva. Capitalizaci6n de las empresas pAblicas Una de las reformas centrales del programa de Gobierno es la capitalizaci6n y democratizaci6n de las principales empresas paiblicas; que busca, por una parte, incrementar los niveles de inversi6n y, por otra, otorgar a la poblaci6n boliviana los beneficios de la propiedad real de los monopolios estatales (las empresas petrolera, de fundiciones, de energia electrica, de telecomunicaciones, de ferrocarriles y de transporte aereo). El Estado boliviano, a lo largo de mas de medio siglo, ha reunido un valioso patrimonio de empresas que, desafortunadamente, s6lo han beneficiado a un pequeno grupo de bur6cratas y politicos. Con el fin de rescatar esos beneficios para la poblaci6n, se plantea un proceso gue devolvera su propiedad y utilidades a sus originales y legitimos duehos: los ciudadanos. Esto sera posible a trav6s del incremento de capital, mediante un procedimiento abierto a inversionistas extranjeros y nacionales, en igualdad de condiciones, a quienes se confiara tambi6n la administraci6n y la participacion accionaria. La mejor garantia para el capital privado sera el asociarse con los propios bolivianos, en la basqueda de reditos compartidos. En las empresas estatales de menor tamafio se continuara con el esquema de privatizaci6n, alentando la participaci6n accionaria de los trabajadores. Preservar el medio ambiente y aproveohar racionalmente los reoursos naturales La base para un desarrollo moderno constituye la recuperaci6n y el uso sostenible de los recursos naturales renovables, como base de todas las actividades de produccion. Preservar el agua, la flora y la fauna es un requisito imprescindible para asegurar la capacidad productiva a largo plazo. Nuestro planteamiento conjuga la urgencia de contar con mayores recursos para atender las politicas orientadas al desarrollo pero, al mismo tiempo, lograr el uso racional de la heredad com(in. Con el prop6sito de plasmar estos objetivos, seran creados los marcos normativos referentes al uso de los recursos naturales y el medio ambiente, se desarrollar& un programa de ordenamiento territorial para su mejor aprovechamiento. Estas acciones estan dirigidas a garantizar el bienestar de las generaciones futuras y crear las bases de sustentaci6n del crecimiento en el pr6ximo milenio. V. EL PAPEL DE LA ASISTENCIA EXTERNA EN EL DESARROLLO. Es innegable el papel fundamental que ha jugado la cooperaci6n internacional en el proceso de ajuste y estabilizaci6n de nuestra economia. El apoyo brindado al pals en materia de balanza de pagos, en la renegociaci6n de la deuda externa y en los proyectos de emergencia social para paliar-el costo del ajuste, fueron elementos indispensables del exito que pudimos alcanzar. En los afiossucesivos a la estabilizacion y al ajuste estructural,  12 la comunidad internacional increment6 progresivamente su cooperaci6n a Bolivia, pasando de alrededor de $US 200 millones en 1988 a un nivel cercano a los 750 millones en los dos altimos ahos. Actualmente recibimos mas recursos de cr6ditos y donaciones de lo que oficialmente exportamos. Tenemos acceso a cerca de 40 fuentes de financianiento bilateral y multilateral, que contribuyen a este flujo de recursos financiando mas de 580 proyectos. Cerca de la mitad de los fondos corresponden a cr6ditos y el resto a donaciones; los primeros destinados basicamente a la balanza de pagos e inversiones y los segundos principalmente a la cooperaci6n t6cnica y la ayuda alimentaria. Nuestro Gobierno esta consciente del grado extremo de dependencia que ha adquirido nuestra economia en relaci6n a la asistencia y el financiamiento externo. Comprendemos tambi6n que, por las nueva coyuntura internacional, este nivel de asistencia no podra mantenerse por mucho tiempo y que debemos en el mas breve plazo posible asegurar un grado aceptable de autosuficiencia. Sabemos que estamos en el buen camino. Nuestro esfuerzo inicial ha permitido crear las condiciones basicas y necesarias para alcanzar un crecimiento sostenible. Ahora nos corresponde convencer a la comunidad internacional que mas que financiamiento externo precisamos inversiones, y junto a la ayuda, necesitamos mayor acceso a sus mercados y en general al comercio internacional. Assi, nuestra politica general en relaci6n a la asistencia oficial al desarrollo se regira por los siguientes principios: a) Emplear eficientemente los recursos a los que ya tenemos acceso, para reforzar las capacidades nacionales y generar un crecimiento domestico. Para ello estamos priorizando programas de desarrollo humano, la infraestructura de apoyo al sector productivo, la modernizaci6n del Estado y proyectos que permitan un crecimiento acelerado y sostenible de la economia. b) Sustituir progresivamente la asistencia por inversiones y por una adecuada inserci6n en la economia internacional. Por ello, los programas que presentamos buscan incrementar, en el mediano plazo, la acumulaci6n y el ahorro internos, reforzar la transferencia tecnol6gica y expandir nuestras exportaciones, asegurando asi la generaci6n de divisas, que luego permitiran compensar la reducci6n de la asistencia externa. C) Reorientar los recursos de la asistencia y el financiamiento externo anicamente a los programas de desarrollo humano y de dotaci6n de infraestructura de apoyo a la producci6n. En este contexto, el Gobierno se ha planteado las siguientes metas a alcanzar hasta fines de la d6cada:  13 a) Concentrar la contrataci6n de cr6dito externo, en lo posible de car&cter concesional, al financiamiento de inversiones publicas en infraestructuray en el desarrollo del capital humano; b) Orientar las donaciones hacia la transferenciade tecnologia y a la soluci6n de problemas de extrema pobreza y emergencias humanitarias y a la protecci6n y conservaci6n del medio ambiente; y, C) Eliminar en el mediano plazo la necesidad de recurrir a la ayuda alimentaria. En esa perspectiva,nos hemos impuesto varias tareas a realizar en el corto plazo que nos permitan emplear de manera eficiente, agil y transparente los recursos externos a los que actualmentetenemos acceso. Una de las medidas inmediatases asegurar una efectiva coordinaci6n de la asistencia al desarrollo, que es, precisamente, uno de los prop6sitos del Grupo Consultivo del Banco Mundial. Tenemos que evitar la proliferaci6n de un numero incontrolable de proyectos aislados.Mantener relacionesclaras y directas con cada una de las numerosas fuentes de financiamiento, muchas de ellas con prioridades y procedimientos particulares, en un dialogo que respete las prioridades nacionales. Es muy probable que nuestras metas de inversi6npublica y nuestras expectativas de asistencia externa hayan suscitado alguna preocupaci6n entre ustedes. Somos perfectamente conscientes que para alcanzar esas metas necesitamos una mejora sustancial de la capacidad de gesti6n de las instituciones del Estado. Las reformas estructurales, anteriormente mencionadas, que nos permitirafn conseguirlo, son principalmente: 1. La Reforma del Poder Ejecutivo, permitiendo la estructuracion de los proyectos en tres programas fundamentales, de acuerdo a las tres Areas de desarrollo: econ6mico, humano y sostenible. Estos tres programas nos permitiran definir con mayor rigor las prioridades nacionales y coordinar la asistencia. La integracion de los mecanismos de programaci6n de la inversi6n publica y del presupuesto nacional (antes bajo la tuici6n de 2 ministerios distintos) con la gesti6n de la cooperaci6n internacional en una Secretaria Nacional de Hacienda, darl mayor coherencia a la asignaci6n del financiamiento global y garantizara la disponibilidad oportuna de los recursos de contraparte. 2. La Descentralizaci6n y la Participaci6n Popular, posibilitando la gestaci6n de los proyectos a partir de la  14 demanda de los propios beneficiarios, quienes podr&n seguir los proyectos, fiscalizar y exigir al Estado mayor eficiencia en la ejecuci6n. Para apoyar financieramente este enfoque de proyectos formulados a partir de la demanda, se fortaleceran los Fondos de Desarrollo Regional, Campesino, FONAMA, FIS y FONVIS. 3. La Capitalizaci6n, que liberara mayores recursos de inversi6n, anteriormente dedicados a las empresas pfiblicas, para su empleo en proyectos de infraestructura y desarrollo del capital humano. De esta manera, se superar& la limitaci6n de recursos de contraparte, que en muchos casos constituyen una traba para los desembolsos. 4. La Modernizaci6n del Estado y la implantaci6n del Servicio Civil permitir& elevar sustancialmente la eficiencia de las instituciones piblicas en la ejecuci6n de los proyectos y la agilizaci6n de los tramites. Paralelamente completaremos algunas medidas instrumentales, tales como: 1. La mejora de los sistemas de adquisiciones, agencias de compra y verificadoras y otros instrumentos de ejecuci6n. 2. La simplificaci6n de los tramites administrativos para la contrataci6n de pr6stamos y para el cumplimiento de condiciones de los convenios. 3. La restituci6n de la autoridad y disciplina en el sistema de Inversi6n Pablica. 4. El restablecimiento de una unidad especializada para la agilizaci6n de desembolsos en la Secretaria de Hacienda. 5. La posibilidad de acceder a financiamientos puente para iniciar la ejecuci6n de proyectos cuyos financiamiento est6n aun en etapa de eligibilidad. 6. La capacitaci6n de personal especializado en formulaci6n de proyectos, procedimientos de desembolso, adquisiciones, seguimiento y evaluaci6n. VI. CONCLUSIONES Pueblo y Gobierno de Bolivia hemos demostrado nuestro compromiso y seriedad en la ardua tarea de transformar el pals. Con sacrificio y fe, la ciudadanla ha aceptado el ajuste estructural y ha confiado nuevamente en nosotros, confirmandonos el mandato del cambio.  15 Estamos convencidos de transitar por la ruta indicada hacia el progreso y el bienestar colectivos. En esta certidumbre, valoramos el apoyo de todos ustedes, representantes de la comunidad internacional, quienes con decisi6n inequlvoca han compartido nuestra vicisitudes y han sentido la satisfacci6n del 6xito hasta ahora alcanzado. Pero estoy seguro que la mayoria de los presentes se sorprenderAn al conocer las cifras de muestran la evoluci6n hist6rica de la inversi6n en Bolivia. Tenemos fundados motivos para creer que el pico mas alto de esta evoluci6n, que se ubica en el aho 1992, no corresponde a la realidad, pues, al parecer, en algunos proyectos se contabiliz6 gasto corriente como inversi6n. En todo caso, cubrir menos del B por ciento del Producto Interno Bruto en inversi6n resulta ciertamente insuficiente para imprimir la celeridad necesaria al desarrollo nacional. Como si esto fuera poco, esta insuficiente cifra todavia esconde un otro aspecto muy grave: mas del 80 por ciento de estos recursos fueron destinados al sector productivo, dejando un residuo menor al 20 por ciento para el Area social. Por supuesto que esta composicion no ha hecho otra cosa que acrecentar las diferencias entre la poblaci6n, por lo que -reitero- se hace insoslayable atender las necesidades sociales. Pero aun falta lo peor: a pesar de los enormes esfuerzos desplegados para atraer inversi6n y ayuda de la comunidad internacional y las condiciones establecidas en el cr6dito externo, aproximadamente el 50 por ciento de los fondos invertidos hasta el presente son de recursos propios. Dado que nuestro pals es incuestionablemente pobre y con una baja tasa de ahorro interno que no nos permite alcanzar mayores cotas de crecimiento, el financiamiento para su desarrollo debe venir, en la mayor medida, de fuentes externas y estar orientado principalmente al Area social. El Banco Mundial y el Fondo Monetario Internacional estiman que en los pr6ximos ahos podemos lograr tasas moderadas de crecimiento del Producto Interno Bruto, del orden del 4 al 5 %. Nuestras expectativas son por cierto mayores. Estamos convencidos de la viabilidad de nuestro programa y del impacto de las transformaciones que llevaremos a cabo y pensamos que es perfectamente legitimo aspirar a tasas de crecimiento del 8%, al termino de nuestro perlodo de Gobierno. Para ello, estimamos que debemos invertir cerca de 6,900 millones de d6lares en los pr6ximos 4 afios. Las nuevas condiciones econ6micas, los programas de capitalizaci6n y de expansi6n de las exportaciones, nos ayudarafna  16 cubrir gran parte de estos requerimientos con inversion privada. Aun asi, estimamos que sera necesario, que en los pr6ximos ahos, el sector piblico mantenga una tasa de inversi6n significativa. Sin embargo, creo oportuno ratificar en este momento, que cualquier esfuerzo que hagamos para alcanzar mayores tasas de crecimiento estara supeditado al compromiso ineludible del Gobierno de mantener la estabilidad econ6mica. Los montos de inversi6n que pretendemos alcanzar requieren un nivel de financiamiento externo mas generoso y comprometido que en el pasado. Consideramos que el aporte nacional debe ser el semillero para captar, y desembolsar, al menos tres veces el valor de cada d6lar invertido por Bolivia. En el mediano plazo, estimamos que Bolivia podra reasumir con sus propios recursos gran parte del financiamiento de esta inversi6n. Consecuentes con nuestra propuesta, la inversi6n ptblica sera progresivamente orientada hacia el capital humano, a la infraestructura de apoyo a la producci6n del pals y a generar las condiciones para tener un desarrollo sostenible. Deseo expresar que, con mucho tes6n, nuestra Patria ha recuperado el pleno respeto de sus interlocutores en el mundo entero y es frecuentemente citada como un ejemplo de lo que debe hacerse para luchar contra las barreras del subdesarrollo. Serla engafioso, sin embargo, pensar siquiera que la tarea esta concluida. Los resultados de las politicas de ajuste y las reformas requieren de un tiempo prudente de maduracifn que, en la mayorla de los casos, es demasiado largo frente a las imperiosas necesidades de nuestros pueblos. Aun mas, el costo social que conlleva enfrentar la realidad nos depara dificiles momentos. Nuestro principal desaflo es mejorar rapidamente las condiciones basicas de vida de la poblaci6n; pues si nuestro pueblo no percibe con celeridad los beneficios del proceso de transformaci6n, estamos conscientes del peligro que se cierne sobre la paz social. Y nadie puede desconocer que sin paz social no es posible garantizar la estabilidad politica, y sin estabilidad politica es un mero enunciado ret6rico el crecimiento econ6mico. Pero, igualmente, sin crecimiento econ6mico es practicamente imposible atender los problemas sociales. Es por ello que requerimos actuar con imaginaci6n y alto sentido de equidad para romper este circulo vicioso que nos aprisiona. Es preciso dejar claramente establecido que, desde nuestra percepci6n, toda politica econ6mica debe estar orientada y disefiada para producir verdaderos cambios ben6ficos en la sociedad. No nos motiva el mero deseo de que los indicadores macroecon6micos muestren cifras gue, al final, no se reflejen en mejores  17 condiciones de vida para los ciudadanos. Consideramos que hemos alcanzado, con el apoyo y la asistencia de la comunidad internacional, metas importantes en el recorrido hacia un nuevo estado de desarrollo, mas digno y a partir del cual podremos asumir, con medios propios, la construcci6n del porvenir plural. Estamos empenados en llegar al punto en que no tengamos que buscar financiamiento externo sino inversi6n. Precisamos su apoyo politico, su respaldo econ6mico y comercial y su mayor solidaridad para culminar este esfuerzo gigantesco. Sentimos que hemos escalado dos tercios de la montafla y que nos encontramos en el momento del empuj6n final. Bolivia, el pais mas pobre del Continente, aquel que muchos juzgaban sin esperanza hace menos de diez ahos, puede hoy demostrar que es posible enfrentar el atraso y la pobreza. Y como nuestro Presidente ha dicho: "Si Bolivia puede, nadie m&s tendra pretextos para no atreverse al cambio". Es por esto que queremos compartir con ustedes, en estos tres dias, nuestro programa para el cambio; lo que hemos llamado el Plan de Todos. Un Plan en el cual tenemos fe, un Plan que tiene nuestro compromiso personal y por el que lucharemos con la esperanza de conducir a Bolivia hacia un futuro de bienestar y paz. Estamos hablando de una transformaci6n verdaderamente revolucionaria, que cambiara la faz del pals y que traera nuevas esperanzas no anicamente a Bolivia sino a cualquier pals del Tercer Mundo. Para ello, requerimos contar con una cifra de inversi6n acorde con semejante esfuerzo. Finalmente, en esta novena reuni6n del Grupo Consultivo, deseamos pedir el apoyo decisivo de la comunidad internacional a nuestro ambicioso e innovativo Programa de Gobierno. Deseamos pedirles, especialmente, que compartan con nosotros este nuevo desaf lo con la solidaridad y la confianza que nos brindaron en el pasado. Deseamos pedirles que mantengan una mente abierta y amplia e incrementen el nivel actual de su asistencia al pals durante los pr6ximos 4 afhos, que nos cooperen y apoyen en atraer inversiones externas y que nos asistan y respalden en la tarea de abrir mayores mercados para nuestros productos de exportacion. Si tenemos 6xito, ustedes tendran 6xito y ambos compartiremos los beneficios. Muchas gracias.  Annex D MEETING OF THE CONSULTATIVE GROUP OPENING ADDRESS BY THE MINISTER OF SUSTAINABLE DEVELOPMENT AND THE ENVIRONMENT JOSE GUILLERMO JUSTINIANO Washington, December 9, 10 and 11, 1993  -2 - TABLE OF CONTENTS I. Basic Concepts II. Unsustainable Processes in Bolivia III. Sustainable Development in Bolivia IV. Tools for Sustainable Development V. The Ministry of Sustainable Development and the Environment VI. A Great Opportunity  - 3- I. BASIC CONCEPTS Bolivia's economic,humanand environmentalfuture will be unsustainableunless decisionsare taken signifyingradical changesin existingpatterns. This is the basic conclusionreached by the present Government,and is the reason underlyingits decisionto adopt the sustainabledevelopment approach and to restructurethe ExecutiveBranchso that it becomesan effective instrumentof change. The conceptof sustainabledevelopmentis the preserve of all people, both throughoutthe world and within individualcountries. Being a new concept, it is difficultto express in precise terms. Despitethis difficulty,we all know that if we do not move in that direction,the world will no longer be a viable entity, and it is therefore our duty to make every effort to take the decisionsand engage in the specific actionsneeded to enable us to do so. While the BolivianGovernmenthas decidedto make sustainabledevelopmentthe hallmark of its entire developmentstrategy, this does not mean that it is adoptingthe top-downapproach typical of the classical image of the State as benefactor. On the contrary, Bolivia's individualsustainabledevelopmentmodel needs to be built from the bottom up by all the social actors involved,with the Governmentserving to coordinateand facilitatethis process of change. We must all be ready to learn that this is a conceptthat cannot be monopolizedor dominated by any one person, and we must be sufficientlyhumbleto accept this fact. Scientists,politiciansand citizensin all walks of life must participateand become involvedin the building of this process from start to finish. This is not an issue to be dealt with by experts or public officials: it is somethingthat affectssocietyas a whole. If the serious structural problems holdingback our country's developmentare to be solved, it is crucial that the planningfunction take on a strategicorientation,with the Governmentno longer being the principalproducer of goods and services, but instead serving to impress the rules of the game upon civil society and to formulateappropriatepolitical and economicsignals to motivatethe economicagents to move in the right direction. After decades of accumulateddistortionsaffectingthe efficiencyand equity of Bolivia's economyand jeopardizing its future, there is an urgent need for action on the part of an intelligent and far-seeingGovernmentthat will remove existing obstaclesand pave the way for a market economythat operates along sustainablelines. II. UNSUSTAINABLEPROCESSES IN BOLIVIA Given the close link between developmentand natural resources in Bolivia and the large share of the natural resource componentin exports, urgent and decisiveaction is needed to prevent the combinedimpact of population growth and rapidly deterioratingresources from making the country unsustainable.  -4- Despite Bolivia's low level of industrialdevelopment,the phenomenonof rural exodus to the cities is accelerating,with serious environmentalconsequences that the municipalitiesare not able to solve. Likewise, certain mining companiesuse processesin their extractionand processing operations that affect air quality and pollute river and lake water in their areas of influence. The concept of sustainabledevelopmentas the kingpinof economic,human and environmentalpolicy has been adopted as a response to the need for action in the followingareas: (1) At the macroeconomiclevel, Bolivia is closing the gap between revenue and expenditure, obtaininggrants from the internationalcommunity,receiving incomefrom the coca economy, and attracting flows of foreign exchangedepositedat short term by reason of the interest rate differential and the country's economicstability. Over the medium and long term, this situation is unsustainable,and we must take steps to reverse these trends. As it happens, funding from the wealthycountries in the form of grants and concessional lending is steadily decreasing, and Latin America, in particular Bolivia, will probably be the most affected. The domestic problemsof the donor countriesand the reordering of priorities at the world level point to a clear downwardtrend in the availabilityof resources of this type for countries such as Bolivia. The coca-basedeconomyis evidentlydeclining,owing to the proliferation of natural and artificial substitutesaffectingthe demandfor coca and cocaineand hence their prices. It is possible to expect that in the foreseeablefuture the revenue generatedby coca economywill decrease to the point where jobs and foreign exchange are seriously affected. We need to be prepared for such a contingency. To a large extent, economicstabilityis based on the large flow of short-term foreign exchange deposits in the Bolivian banks. The economyis heavily dollarized, indicatinga high degree of exchange risk aversion. Likewise, the short term of the deposits is also indicativeof risk aversion. Despite the fact that the deposits have remained relativelystable, the system itself is very fragile. (2) Despite the economicreforms of 1985, the basic structure of production, and particularly of exports, continues to consist of goods with a large natural resource component. Bolivia has become accustomedto relying on the exploitationand export of renewableand nonrenewablenatural resources such as silver, tin, rubber, hydrocarbons,wood and certain agriculturalproducts. Its dependenceon natural resources continuesto be a key factor, and a clear indicationof this is that one of the few major projects viable for the future is the sale of gas to Brazil. With the rapid depletionof resources and the dramatic plunge in their real prices, continued dependencyon the massiveexport of its natural resources is in the long run unsustainablefor Bolivia. We need to seek other production options that will take account of our comparativeadvantagesand of the market.  (3) There is no doubt that land and the forests have representedthe main buffer for generating jobs and solving the social problemsof a growing population. In the fifties and sixties, the population,then rather sparse in relation to the country's natural resources, falsely believedin the almost limitlesspossibilityof solvingproblemsof food and employmentby giving away land to the rural dwellers in the country's lowlandareas. The outlooktoday is truly alarming, since the buffer is rapidly disappearingand we are faced with a critical situation. The followingprocesseshave been identified: (a) the relativelyhigh populationgrowth rate (2.03%) is generatingan annual demand for jobs that the economyis unableto provide; (b) the productivecapacityof the natural resources in the upland areas and valleys (soils and water) is steadily deteriorating,and this affects the numberof people that can be supported there and accentuatesthe problem of povertyand unemployment; (c) the lowlands, and in particular the foothills,have proven to be ecologicallyfragile for the slash and burn systemsdevelopedby rural dwellersmigratingfrom the uplands and for mechanizedcommercialagriculture. There are limits to the future expansion of itinerantfarming, since there is a dangeroustendency on the part of itinerant farmers to farm areas suitable only for forestry purposes. (d) the selectivecutting of fine woods by lumber companiesat a pace faster than that of natural regeneration,affectingthe continuityof loggingoperations, as well as uncontrolledexploitationby rural dwellerswho have not found the answer to their economicproblemsin farming, are both factors that are rapidly depletingthe country's fine wood reserves, as well as impactingon biodiversity; (e) the rapid economicexpulsionof rural dwellersfrom the uplandareas, combinedwith the limitedarea of land availableand its concentrationin few hands, will probably generateheavy pressure on the lands owned by businessmen. A timely and appropriate solutionto this problem is needed, if violenceand mayhem are to be avoided. (4) Critical poverty, the absence of effectivemechanismsfor grass-rootsparticipation, and the Government's ineffectivenessin solving its citizenry's crucialproblems are also generatingan unsustainableprocess in social terms. There is a high correlationbetween critical poverty and environmnental damage. For this reason, if the cause is not eradicated,it will be very difficult to solve the problem of deteriorationof the natural resources and the environment. Bolivia's average quality of life indicesare amongthe lowest in the world, but if we separate the rural from the urban sector, the levels for the rural sector alone, affectingapproximatelyhalf of Bolivia's population, are shown to be extrernelylow. The Governmenttherefore needs to provide integratedand consistentmanagementin all areas that ultimately affect human beings, who must be the central focus of all efforts to change.  -6 - The Governmentneeds to offer facilitiesand opportunitiesto its citizensto enable them to develop all their capacities for solving their most pressing problems. We cannot continue to rely on the belief that the State, with its benefactor role, will be able to solve all its citizens' problemsby itself. Nevertheless, it is duty-boundto organize itself in such a way as to providethe facilitiesand opportunitiesthat will enable the various social groups to solve them. This is a new approach, and one that is sustainableover time. (5) Bolivia's economy cannot continueto be preponderantlyin the hands of the state-owned enterprises, nor can it support a public sector that is disproportionateto the size of the economy. This situation will clearly be unsustainablein the future. The state-ownedenterprisesdo not have the wherewithalto invest in new technologiesand join the world market. We need to open them up to the idea of capitalization,with individuals owning equity participationsand private investors providingadministrativeand technological leadership. The best guaranteefor the investors will be their Bolivianpartners, who will defend their companybecause in most cases it is their principalasset. m. SUSTAINABLEDEVELOPMENT IN BOLIVIA We are consideringsustainabledevelopmentas a general concept, and not simply as an environmentalissue. Bolivia's long-term sustainabledevelopmentwill depend on successfulaction in three crucial areas-the economy, human resources and the environment. In the economicarea, Bolivia needs to rethink its approach to the world markets and change its production and export structure to take account of its dynamic comparativeadvantages,based principally on the human factor and not only on natural resources. This will require a radical effort in terns of human capital and internationalmarkets open to competition. In the humanarea, our cultural diversityshould be seen as a factor capableof providingthe linkages, cohesion and stimulusrequired to forge a true nationalspirit. For this to come about, all social segments need to feel that they are effectiveparticipants in the country's developmentprocess, operating on equal terms and with the same opportunities. In the environmentalarea, we need to reconcileproductionwith natural resource conservation, to harmonizeman with nature. This will require concertedefforts to sensitize the country's citizensto what is required of them, and the formulationof simple and direct policies that will encourage them to move in the right direction. IV. TOOLS FOR SUSTAINABLEDEVELOPMENT In practical terms, we have adoptedthe followingmain policies: (a) Economic Intensifynew domestic and foreign investmentsthrough capitalizationof the leading state enterprises, in order to create more and better jobs, increase growth in GDP,  -7- improve efficiency,incorporatenew technology,generatenew exports and raise tax revenueto financethe change. Scale down the public sector to levelscompatiblewith the size of our economy, with the objectiveof makingit more efficientand more stable. Establishstable and effectiveregulationsfor promotingdomestic and foreign investment,through simplenondiscretionary mechanisms. Expandand improvetransportation,communication services infrastructure,in and order to facilitateand reducethe costs of Bolivianexports and provideincentivesfor the use of export corridors by neighborcountries. Eliminatethe involvementof the State in the productionof goods and services and strengthenits capacity for generatingpolicies and monitoringprocesses. Substantiallyimprovethe abilityof the State to collect taxes and fees, either directly or through service contracts. Train governmentemployeesand encouragecareers in public administration. Developdomestic savings in order to decrease dependenceon external resources. (b) Human resources Drasticallychange the allocationof resources (investmentand expenditure)toward the rural areas, eveningout the per capita amountsbetweenthe rural and urban sectors with a view to decreasingextremepoverty. Significantlystrengtheneducationat all levels, especiallyprimary education,through sweepingchangesbased primarilyon decentralizedmanagement,respect for cultural diversity and stimulationof creativity. Provide for innovativegrass-rootsinvolvementbased on the principle of subsidiarity, so that citizensare involvedand have ownershipin solvingtheir main problems. Instead of its role as a benefactor,the Governmentwill become a facilitatorin the resolutionof problems. Take an integratedapproachto the provision of services and solution of problems in education,health, housing, water and sewerage services, culture, sports, and ethnic-, gender- and generation-relatedissues, as a departure from the classicalsector-based approach. Pay special attentionto the most vulnerableand poorest groups, such as native peoples, women and children.  -8- (c) Environment - Implementa broad-basedplan for the involvementof various social and institutional-both formal and informal-players in the pursuit of sustainable development. - Design and promote a comprehensiveplan for educatingthe public and raising its awareness. - Prepare a SustainableDevelopmentStrategy, to be completedin 1994, to serve as an effectivetool in decisionmaking the Governmentin 1995, 1996and 1997. This is by not to be an adornmentfor the library shelf. - Prepare all the necessaryregulationsfor the sustainablemanagementof natural resources, especiallyforests, land and water. - Prepare all the necessaryregulationsto protect the environmentthrough a system of incentivesand penalties, using simple mechanismsthat avoid discretionality. - Make a baseline assessmentof renewablenatural resources as key inputs for decisionmaking. V. THE MNISTRY OF SUSTAINABLEDEVELOPMENT AND THE ENVIRONMENT The Ministry of SustainableDevelopmentand the Environmentwas established in response to the need to link the present and the future and to coordinateproductionwith the conservationof natural resources. We are using the broad concept of sustainabledevelopment,and not only as it refers to natural resources and the environment. In accordancewith the MinisterialLaw approvedin September 1993, the Ministry of SustainableDevelopmentand the Enviromnenthas three key responsibilities: long-term strategic planning, conservationof renewable natural resources, and environmentalprotection. The model is probably unique in the world, in that it incorporateswithin its anbit three factors essential to the developmentof a country such as Bolivia. We arrived at the conclusionthat the institutionalmodel of environmentministries or secretariats disassociatedwith the economicprocessesand the allocationof natural resources would not work for Bolivia. This is why the three areas mentionedabove were included. As a whole, this process of change requiresthe ongoing interactionand coordinationof the Ministries of Finance and EconomicDevelopment,Human Development,and Sustainable Developmentand the Environment. This integration-which will unify the entire process-will be provided thorough the Sustainable DevelopmentCouncil that will be chaired by the Presidentof the Republic.  -9 - The Ministry of SustainableDevelopment the Environmentwill work simultaneously and in the followingmain areas: (a) the formulationof a sustainabledevelopmentstrategy; (b) the formulationof a Land Law that resolves the main problemsof land tenure, access and clear titling; (c) the establishment a rural cadastrethat brings order to land tenure and facilitatesthe of applicationof an efficientand equitabletax system; (d) preparationof a Forestry Law that facilitatesand promotessustainableforest management; (e) the formulationof a Water Law that resolvesthe mainproblems of access, use and conservationof water; (f) the establishmentof all necessaryenvironmentalregulationsat both the general and sectoral levels; (g) the establishmentof economicincentivesfor encouragingeconomicagentsto act appropriately; (h) the implementation a comprehensive of plan to educatethe public and raise its awareness in order to achievesustainabledevelopment; (i) the implementation a broad-basedAgenda XXI followingthe Rio Earth Summit. of In carrying out all these activities, the Ministry of SustainableDevelopmentand the Environmentwill need three systemsthat act in a coordinatedand simultaneousfashion: a think tank similar to UDAPE, Bolivia's Office of Politicaland EconomicAnalysis, an infornation system (an expandedand strengthenedNational StatisticsInstitute), and a system for participation(departmental and provincialmechanisms). In this connection,an institutionbuildingprogram is vital. VI. A GREAT OPPORTUNITY Despite the seriousnessof its problems,Bolivia is probably one of the best equipped developingcountries to tackle such change, owing to its: (a) relativelyextensiveterritory (1,098,581 km ) relative to population(6.4 mnillion); 2 (b) relatively high populationgrowth (2.03 % per year), but controllableas an overall process; (c) relativelyabundantnatural resourcesin forests, land, water and energy; (d) relatively low use of resources(agriculture 1.1%,stockraising6%) in relation to total nationalterritory;  - 10- (e) large percentageof forests (51%) in relationto total nationalterritory; (f) lack of serious and large-scalepatterns of violence; (g) existenceof rural and urban grass-rootsorganizationsthat can facilitatethe processes that engender changewith broad-basedparticipation; (h) reasonablybalanceddistributionof populationserved by the main roads (La Paz, Cochabambaand Santa Cruz); (i) lack of serious racial problemsdespite the neglectof certain marginal groups; (j) lack of a large industrialsector that causes large-scaleenvironmentaldamage; (k) existenceof a democraticprocess that has continuedto improve over the last 11 years. For all of these reasons Bolivia's time has come. We have a great opportunity that we must not waste. Thank you.  Annex E CONSULTATIVE GROUP FOR BOLIVIA Washington D.C., December 1993 STATEMENT OF MR. FERNANDO ROMERO M. MINISTER OF HUMAN DEVELOPMENT CONSULTATIVE GROUP FOR BOLIVIA Washington D.C.,Decmber 193 The Global Vision - aim at providing him with opportu- nities; Bolivia is embarked in a long and profound - promote and facilitate his partici- process of change. This process aims at pation in the system; establishing a country different from what Bolivia was ten years ago, or is today. It aims at - support his development and setting the foundationsfor a countrywith: satisfaction of basic needs in an integratedmanner. - an open, stable and dynamic economy; This vision, and the recognition of the need to - a strengthened democracy, intervene on the social side of the complex - more effectiveand solid institutions; developmentequation,made it increasinglyclear - an increased participation of its that the two key elements, economicand social, citizens in economic, social and could be linked effectively, and in a balanced politc processes; manner,only througha search for sustainability. - a widerrange of opportunitiesfor its Thus, sustainabledevelopmentbecame the basic citizensto decidetheirfuture; forcebehindthe inspiredidea to tackle the human - citizens that recognize their respon- side handin hand with the economicside. sabilitiesand obligations; - a significantly decreased need for I shouldstress that embeddedin this vision,and a external supporm prerequisite to achieve it, is a significant improvementof social conditionsin Bolivia. As A lot of groundhas beencoveredsince 1985,and a number of social indicators reveal, in spite of thus far the results have proved the efforts and some of the recent achievements, Bolivia still sacrifices to be worthwhile.The process has not lags very much behind similar countries in Latin ended, however, and there are still many America.There is significantcatchingup to do if challenges ahead. One of the most important Boliviais going to try to come close to the Latin chaUengesis the need to effectivelyaddress the Ameican average. deficienciesin the so called'social sectors". The very special importancegiven to the sector Our Human Development Strategy by the present govemment is a recognitionthat the processof reform will not be completeduntil It must be recognized thal, in order to pursuit significantand positivechanges in this area have this vision effecively, certain changes needed to been accomplished.This recognition,in tun, is be made. Thus upon taking office the new the natural consecuence the early achievements of Govemment of Gonzalo Sanchez de Lozada in this process of change: the consolidation of embarked in a far reaching process of democracy and economicstabiity. Undoubtedly institutional reform via the recently approved these two elements provide a more favorable Law of the ExecutiveBranch. As the Ministerof environmentfor socialdemandsto be voiced. EconomicDevelopmentexplained,the executive branchhas undergonesignificantchanges.These changes, which involve a radical departure from traditional structures, reflect not only a The Human Development Vision commitmentto imnpr't'he effectiveness of the executive branch,but also a commitment,on the The government's global vision encompasses a part of the Government,to pay special attention precise view of the reforms needed in the to the social sector. There are two elements that traditionally called social sector. The reforms have contributed to the adoption of a new should be a decisive step in establishing the scheme: necessary conditions to guarantee that all policies and public endeavors in the human - A clearer understandingof develop- development awea ment.Paralle to the evolution of the literature on economic development the Bolivian Government has come - have man as ItSfocus; to recognize the- key role of the STATEMENT ML FEANO OF ROMERO M. MNIER OF HUMANDEVELOPMENT CONSULTATIVE GROUP FOR BOLIVIA WashlngtonD.C, Deember 193 human resourcesin the development sufficienLMan must be in a position to grab the process. opportunities and meet the challenges brought about by strong economic growth. Placing man - The recognition of the elements in such a position requires his participation.That inherent in the previous structure is grass roots developmentand it is just, if not that constituted hindrances to the more, important than the old top to botom good performance of the social approach_ sector. In addition to recognizing the key role of the I shall discuss these two points briefly with the human being, the Ministry of Human purpose of contributingto the understandingof Development is intended to overcome two the executivebranch reform,and particularlythe important misconceptions of the previous establishment of the Ministry of Human adminisratve structure: Development in Bolivia. In doing so I should stress that the integrating view leading to the - The traditional subordination of the creation of the Ministry of Sustainable social sector to the economicsector. Development and Environment is also a key element - The sectoral and compartamentalized approach to solve social problemsas Over the last few years the thought with respect if each sector such as education or to development has evolved significantly. In health were totally exclusive of each general there is an increased recognition of the other thus looking at every area crucial role that human capital plays in without a comprehensiveview. development. In line with this, the Bolivian Governmentrecognizes that the most important Experience has shown that the administrative engine for development, and the greatest structure characterized by the two elements comparative advantage, that a country can have above, has led to very poor results. In particular are its human resources accompanied by a it brought about: rational use of its natural resources. Acknowledging key role of humanresources the - Insufficient attention paid to the helps us focus on what should be a mainconcern sector. - Politicalinterference. of any government: human development. The desire of the BolivianGovernmentto put human - Duplication as evidenced by developmentat par with economicdevelopment, programsthat overlap. - A high degreeof dispersion. under the umbrella of usustainabilityw to the led establishment of the Ministry of Human - Policies that were incoherenL DevelopmenL As can be readily explained the ^ Misallocation resources. of changesalso reflect the recognitiontat lack of confidence and participation on thepartof theaveragecitizen. - Although necessary, economic development and wealth creation is The Ministry of Human Development and its not sufficienL place within the new executivestructure has been conceivedas the instrumentthat can, on one hand - Human development is not sponta- contribute to give the social sector the neous, it does not happen simply as imporance that it should have, and on the other a result of economicdevelopmenL facilitate an integrated approach and coherent actionin the social aea - Intervention is necessary to assure that every citizen has access to the opporunities that arise as wealth is Challenges Abead In the pursuit of this vision the Ministry of This recognition implies that traditionally Human Development faces a number of understood development -investment and challenges. While there are the traditional production driven- is essential but far from challenges of contributing to the provision of SIATEMENT OF MR FERNANDOROMERO M. MKNINSER HUMAN DEVEALOPMENT OF CONSULTATIVE GROUP FOR BOLIVIA Washington D.C.,Deomber 193 social servicesin an effectiveway thereare alsoa and on the Bolivian people. As we will explain numberof new challengesthat arise from the role to you in the next coupleof days we believewe the individualis expectedto play,and the need to have most of the necessary ingredients to facilitate his full participation in the system. accomplishthis task successfully: Man needs to be seen as both,the unquestionable final subject for development as well as the - clearideasof whatneeds to be done; most effective means to achieve iL To ignore - the resolve and politicalcourage to this duality has proven to be a mistake. It is takeon the challenge; imperative that we break away from a - people with the necessarycapacity paternalistic system where government and and commitmenL political actors felt totally responsible for solving people's problems forgetting that We do recognize,however,that we need, perhaps without people's participation,there simply are more than ever before,one importantingredient: no effective and long lasting solutions. On this internationalmaterialand moral supporLWe are basis the Ministrymust, and will, be concerned committedto allocatingour limited resources in with: the most sensible manner, yet, to achieve the changes in the magnitude we envision, such - Making Popular Participation a supportis simplycrucial. workingreality. * Strengthening community cons- Simplystated, successin our endeavorhingeson cience. two variables: performance and resources. We - Strengthening the authority level have a clear understanding that, while our closestto the individual. performance is decisive at this time so is the - Overcome the resistance of the availability of resources.These two go hand in politicalclass to part with power. hand and the lack of either one could make the difference between success and failure. We are These are challenges that can be stated very aware that if we come short of our plans there simply yet they are very hard to implement.On mightnot be another chance. I don't mean for us one hand people do not react to plain rhetoric, as a government,but for Bolivians as a nation, and a simple invitation to participate in not Bolivia an a country. Resources are particularly enough. To facilitate participationa lot of work importantat this point in time. We are probably to remove legal and institutional impediments facing a uniqueopporunty to make this happen. has to be done. Additionally, the benefits of Most ground work has been done and if ever participation have to be clearly explained, and Bolivia is going to make it on its own, and every effort has to be made to assure that those significantly cut down its dependency from benefits materialize. On the other hand, foreign support, it is now. Paradoxically, to politicians face a predicament, fostering and break away from such dependency, the country achieving citizen participation in certain needs, in this last trench increased support and, decisions takes away their power. Their success by and large significant improvement in the in this endeavoris the seed of their own demise. adminisuaton of suchresources Let me finish by saying that. although we face a Conclusions tremendouschallenge, we like to think of it as a great opportunity. We believe that we can I started by saying that Bolivia is embarked in a accomplisha grat deal in the years ahead. We long process of change. We are entering a new invite you to join us in this endeavor,as you did stage of this process. We recognize that the when we started the whole process eight years responsibility for fostering the changes that ago, of permanently changing this country for Boliviarequiresrests on the Boliviangovernment the better. STATEMENrOF ML FERNANDO ROMERO M. MIISTrER OF HUMAN DEVELOPMENr  Annex F CONSULTATIVE GROUP MEETINGSFOR BOLIVIA Washington,D.C., December9-11, 1993 Statementon EconomicPerformanceand the Government's Program by Dennis de Tray, World Bank Delegation Mr. Chairman, DistinguishedRepresentativesof Bolivia, Distinguished Delegates: In my remarks to this gathering last year, I stated that Bolivia faced two critical challenges in the months following that meeting. First, the elections to be held the following June had to be managed well. Second, the governmentthat took office followingthose elections had to signal early and clearly that it was committed to continuing and strengtheningthe country's adjustmentto an open, market-basedeconomy. My view was then and still is that Bolivia's future depends on private sector developmentand that the single greatest stimulus to private investmentis an orderly change of government. Bolivia squarely met these challenges. The presidential election of June 6, 1993 ushered in the smoothestdemocratictransition of governments in the Bolivian history. Those of you who worked on Bolivia during the previous election period in 1989 will recall that the country waited for months after the election before it learned who the next president would be. In this year's election Mr. Gonzalo Sanchez de Lozada emerged as a clear winner and within a few days had put together a working coalition and the foundationof a new administration. It is also important to note that while they may have voted for differentparties, a health majority of Bolivians (57 percent) voted, in effect, for a continuationof the market-basedmodel of developmentlaunched by President Paz Estenssoro and his administrationin 1985. The Government of Mr. Sanchezde Lozada is not simply continuing the reform program passed on by the previous government. The new administrationis proposing an ambitiousprogram that will sharply accelerate much-needed private sector investmentand aggressivelyattack Bolivia's stubborn and pervasive poverty. As we have just heard, the driving force behind the Government's program is a commitmentto remove the public sector from productive and commercial activities so that it can concentrate on improvingessential infrastructure and providing basic social services especially to the poor. This vision is not new. What is new is how this administrationis proposing to make it a reality. Past efforts in Bolivia to promote private sector developmentby getting the Governmentout of productive activities and by building-an enabling environmentfor private investmenthave produced to date only modest results.  2 Major public sector enterprises have for the most part been left untouched, blocking private investmentin many key sectors, and Bolivia's legal and regulatory system is still antiquated and cumbersome. At less than 6 percent of GDP, private sector investmentremains well below levels needed to move Bolivia up the per capita income ladder. The proposed Capitalizationprogram is designed to change this picture. The major public enterprises in hydrocarbons, telecommunications,electricity, aviation, railway, and smelting will be revitalized through a partnership with private investors who will bring to these enterprises not only fresh capital, but new technologiesand new management. This partnership will not be between the government and the private sector; it will be between the citizens of Bolivia and private domestic and foreign investors and managers. Regulatory and legal reforms to accompanycapitalizationwill provide an essential framework that will regulate privatized utilities and natural monopolies created by capitalizationand, perhaps more importantly, stimulate private involvementin other sectors of the economy. While Bolivia must have growth to serve its poor, it must also have a public sector capable of providing adequate basic services - education, health, sanitation - to all Bolivians. It must achieve this essential goal with limited fiscal and institutional resources. The cornerstone of the Government's effort in this area is increased community participation that will give all Bolivians voice in the public decisions that affect their lives and the lives of their children. The World Bank fully endorses the Government's programs of capitalization, participation and sustainable development. These programs will build an economic and social foundation from which all Bolivians can work to better their lives. What are the prospects for success? What are the likely stumbling blocks? Perhaps the most serious immediate problem facing the current Government is the need to return the economy to a stable macroeconomicplatform. My colleague Patricia Brenner of the IMF will discuss the current status of the macroeconomicsituation following my statement. Suffice it to say that this administrationinherited a difficult macroeconomicsituation and is moving already to correct past mistakes. There is, however, still a difficult battle ahead that must be won. Sound macroeconomicmanagementis a sine qua non for growth in Bolivia. Any reform program, however laudable in its goals, will fail if it is not built on a sustainablemacroeconomicfoundation.  3 The second great challenge facing the Governmentis implementation. Somewhat ironically, making the private sector an effective engine of growth for Bolivia requires a stronger, not weaker government. Efficientand equitable legal and regulatory systems must exist in reality, not simply on paper. Aggressive civil service and judicial reform programs are essential to the success of the Government's efforts. The challenge to Bolivia's public sector is even greater when one takes into account the Government's commitmentto shift public sector investmentfrom traditionaleconomic activitiesto human resource developmentand social investments. The record of project implementationin education, health, and rural developmenthas not been good. Communityparticipation in the decision making process is the necessary remedy, but the record of other countries shows that participationitself can be difficultto implement. Make no mistake: The direction the Governmentgoing in its social programs is the correct one. We must simply work hard to take advantageof lessons from decentralization experienceselsewhere to move this process forward as quickly as possible. The reform program outlined by the Governmentis a laudable and ambitious plan to put the Bolivianeconomy on a much accelerated growth path. But, the challenges it presents to the public sector are immense. Will the Government succeed in its efforts? The early returns give grounds for optimism and some caution. Most importantly the Governmenthas put together an exceptional team of highly qualified individualswith strong technical expertise. I have been fortunate enough to meet many members of the new team and I can tell you they are an impressive group. If anyone can achieve the revolutionthat President Sanchez de Lozada wants this group can. I view the quality of its appointmentsas the first real test of a government's commitmentto reform. On this test this administrationhas scored very highly - and under extraordinarily difficultpolitical pressures. On a more sobering note, the pace of actions during the first 120 days of this administrationhas met neither our nor President Sanchez de Lozada's expectations. A complete reform of the executivebranch added to the usual high costs of transition between administrations. While we and the Government are still learning to work with the new system, we are now at the point where we can look forward to a future in which the highly talented individuals drawn together by President Sanchez de Lozada can focus on the business at hand: transforming Bolivia. A closing thought: In the developmentbusiness we are often presented with what are described as "unique opportunities." With disappointingfrequency these offers turn out to be neither unique nor opportunity laden. I firmly  4 believe that we are facing with this administrationa genuinely unique opportunity. Few governmentshave advanced as ambitious a program of economic and social reform as has this government. Few governments have put together a team of the quality of this government's team. In response Bolivia deserves from its external supporters more than just "business as usual." Thank you.  Annex G Statement by the IMF Representative at the Meeting of the ConsultativeGroup for Bolivia in Washington. D.C. on December 9, 1993 Mr. Chairman: Bolivia has continued to implement the broad economic reform program initiated in 1985 and centered on market-based,export-orientedpolicies. The Fund has been supportingthis effort zince the outset, includLng through an ESAF arrangement for SDR 136 million approved in July 1988. The Fund's Executive Board approved a fourth annual arrangement under the ESAF in September 1992 for SDR 27.2 million. Completionof the review under that arrangement has been delayed,mainly because of fiscal slippages in the period preceding the presidential election In June 1993. In early September 1993 the Board approved an extension of the arrangement to *nd-Karch 1994. Fund staff has discussed with the authorities the measures needed to bring the program back on track and, after a period of performance, allow for the completion of the review. During the period 1989-93 real GDP growth has averaged over 3 percent a year while inflation fell xteadily, to 10 1/2 percent in 1992. In spite of a pronounced deterioration in the terms of trade, progress also has been made toward external viability. External debt declined from 101 percent of GDP at the end of 1987 to 77 percent at the end of 1992, and gross internationalreserves reached the equivalent of 4.4 months of imports. Important structural reformz also were implemented. Notwithstandingthis progress, the economy remains vulnerable to external shocks, and the debt service burden remains high. Bolivia  -2- continues to be among the poorer countries in the Western Hemisphere, as measured by many social indicators. The implementationof fiscal policy weakened in the first half of 1993, and the deficit of the nonfinancialpublic sector widened considerably. As foreign grants and loans to the public sector declined from the high levels recorded in 1992, central bank credit to the public sector increased considerably. Inflation, which had declined through April 1993, subsequentlypicked up and Is expected to be about 10 percent for the year. Real GDP growth is projected at slightly above 3 percent in 1993, led by a favorable agricultural harvest. The new authorities have expressed their commitment to continued cooperation with the Fund and to the macroeconomicand structural policies of the program supported by the ESAF. They have begun to implement an conomic program based on an immediate fiscal adjustment, primarily through strict control of expendUtures. In addition, the Governaent i undertaking a program of downsizing the public sector, with some 9,000 positions (or 4 percent of the total) to have been eliminated before the end of the year. About two thirds of the reductions are in the public enterprises and these reductionx are considered to be an important stop toward making the enterprises attractive to private investment. The program for 1994 aims at lowering inflation to 7.5 percent, and real GDP growth is expected to pick up to about 4 percent. A modest recovery of the terms of trade is projected for 1994, along with strong export volume growth, particularly for soybeans and gold. The external current account deficit would decline from about 9 percent of GDP in 1993 to  -3- about 8 percent of GDP in 1994, while net internationalreserves are targeted to increase further by a moderate amount. The fiscal program envisages a reductionof the deficit from more than 6 percent of GDP in 1993 to 3 percent in 1994, consistentwith a small primary surplus and projected external financing. The program calls for strict control of current expenditure and a shift of public investment expenditure toward the social sectors and infrastructure,particularlyroad constructionand maintenance. In addition, the Government intends to Implement a restrained public sector wage policy in 1994, with the average wage increase to be limited to projected inflation. Together with the reduction in the size of the public sector in late 1993, this wculd result in a reduction of the wage bill of the public sector relative to GDP, Monetary and credit policy in 1994 will be geared to achieving the inflation and balance of payments objectivesof the program. The elimination of the domestic borrowing requirementof the public sector will make room for a growth of credit to the private sector that is faster than the growth of GDP, thus supportinga plckup in private investment. The. exchange rate will continue to be set by daily auctions in the Central Bank, with unrestricted access. The new Governmenthas designeda program of structuralreforms aimed at a substantial improvement in resource allocation in the public and private sectors over the medium term. Elementsof the structuralprogram include education and pension reforms, additionalmeasures to strengthenand streamline fiscal management, and the establishment of an autonomous central bank. Another key component of this strategy is the transfer of effective  -4- control of the largest public enterprises to the private sector through a plan of capitalizationdesigned to attract private investment. A capitalizationlaw is under preparation,together with legislation that would provide the necessary regulatory framework for the telecommunications, electricity,and hydrocarbons sectors. The medium-term outlook indicates that implementationof Bolivia's economic and social program will require not only the resolute pursuit of sound economic policies and increased donestic savings, but also substantial external support. A debt restructuringoperation with commercial banks (financed entirely by grants from bilateral donors and IDA) was completed in May 1993, through which most of the debt to banks was eliminated (and about US530 uillior converted to 3:-year zero coupon bonds). Private financing flown are projected at about US$210 million a year in 1994 and 1995. The consolidationperiod for the January 1992 Paris Club rescheduling has been extended in principle to Karch 1994, and for the medium term further rescheduling of official bilateral debt can be expected, including a possible stock of debt operation. In light of the Government'sprogram and the financing that already in in place, official grants end long-term loans for 1994-95 would be required at about the same pace as that received in the last two years (annual gross disbursementsof grants and loans of US$550-600 uilllon). Given Bolivia's low income and limited debt sorvicing capacity, virtually all of this assistance will need to be on concessionalterms. The Fund will continue to work closely with the Bolivian authoritLes in support of their economic program. Upon successful conclusionof the  5- current arrangement,which could take place in Karch 1994, discussions could begin for a new program, possibly under a successor facility to the ESAF.  Annex H Discurso de Clausura Ministro Fernando Illanes Presidente de la Delegaci6n Boliviana Grupo Consultivo, Diciembre de 1993 Hemos tenido el placer de compartir con ustedes dos dias de discusiones sobre el futuro desarrollo de Bolivia y esperamos haberlos convencido de la decisi6n y el compromiso del nuevo gobierno boliviano para impulsar, en los pr6ximos cuatro anos, un programa de reformas trascendentales, que cambiaran definitivamente el destino de nuestro pals. Como ustedes habrdn advertido en nuestras presentaciones, estamos profundamente comprometidos a culminar el proceso que iniciamos 8 amos atras. Cuando, con su apoyo y solidaridad, logramnos restablecer el orden y la estabilidad econ6mica, en un proceso que se ha constituido en un ejemplo mundial y gue ha conguistado el respeto y la admiraci6n de toda la comunidad internacional. El mensaje clue el presidente Sanchez de Lozada nos encomend6 transmitir a los gobiernos amigos y a las organizaciones internacionales que se ban reunido estos dos dias con nosotros, se resume en las siguientes palabras. Bolivia es un caso ejemplar de esfuerzo y sacrificio. Hemos conseguido superar muchos obst6culos y hemos logrado crear condiciones suficientes para alcanzar niveles de vida mAs dignos y satisfactorios para nuestro pueblo. Estamos en medio del camino y necesitamos el impulso final para culminar nuestra empresa. Es un momento cr$tico en nuestra historia. Es quiz&s la mejor y tltima oportunidad de demostrar que si podemos superar la miseria, la injusticia y el postergamiento. Sabemos muy bien que lo fundamental del esfuerzo nos corresponde a nosotros, los bolivianos, y en nombre del nuevo gobierno asumimos plenamente el desaflo. Sin embargo, no nos cabe la menor duda, que solos, con nuestros escasos recursos, no podremos lograrlo en un plaz2 aceptable. Necesitamos, hoy m&s que nunca,la ayuda generosa, la solidaridad franca y el respaldo decidido de todos nuestros amigos. Si Bolivia, el pals mas pobre del continente, logra superar las barreras del subdesarrollo reajustando su economla, nadie tendra mas pretexto para no hacerlo. Esperamos haber logrado comunicar a ustedes, en estos dos dias, la seriedad y la resolucifn de nuestros prop6sitos. Es normalmente dificil para un nuevo Gobierno probar que sus intenciones son serias y que sus planes son viables y serAn cumplidos. Sobre todo, cuando 6stos contienen ideas innovadoras y propuestas tan ambiciosas como las nuestras. Afortunadamente, muchos de ustedes han tenido en el pasado pruebas inequlvocas de nuestra resoluci&n, de nuestro compromiso y de nuestra responsabilidad en la conduccion del Gobierno. En este nuevo perlodo, fortalecidos con nuestra exitosa experiencia anterior y con el respaldo politico cada vez mEs amplio del electorado boliviano, deseamos comprometer vuestro apoyo para enfrentar los siguientes grandes desaflos: * consolidar la democracia participativa * impulsar un proceso sostenible y equitativo de crecimiento econ6mico * consolidar una economla abierta de mercado manteniendo la estabilidad macroecon6mica * modernizar el papel del Estado y sustituir su intervencifn en las actividades productivas y comerciales con la iniciativa privada * dar fuerza y contenido a la participaci6n popular * incrementar sustancialmente los recursos y la calidad de la educacifn y la salud * acelerar el desarrollo del campo y las provincias * desterrar 1 pobreza, la ineficiencia y la corrupcion garantizar e1 uso adecuado de nuestros recursos naturales sustituir el cultivo ilegal de la hoja de coca Para cumplir las tareas que nos hemos propuesto, hemos presentado ante ustedes un conjunto articulado y coherente de programas y proyectos que requieren financiamiento e inversion externa. El cuadro a continuacifn resume los requerimientos de nuestros programas prioritarios para los pr6ximos 4 aftos. Densrrollo econ6mioo Capitalizaci6n 137 Corredor.es de exportaci6n 642 Exportaciones no tradicionales 165.8 Turismo 27.5 Gasoducto a Brasil 429 Desarrollo agropecuario 142.9 Servicio Civil 166.2 Desarrollb bumano Educaci6n y cultura 277.8 Salud y nutricifn 308.6 Saneamiento basico 210.7 Urbanismo 17 Reconversi6f laboral 235.4  Desarrollo sostenible 91.2 Estudios, planes y fortalecimiento 75 Fondo amaz6nico y fiduciario Desarrollo alternativo 516 3603.1 Total corresponden al De este imonto, aproximadamente 2,842 millones cuatro afios y 760 programa de inversi6n piblica de los pr6ximos Civil, lineas de millones a gastos de personal del Servicio cr&dito, estudios y asistencia tecnica. parcialmente de apoyo Algunos de estos programas ya benefician y bilaterales. financiero y t6cnico de fuentes multilaaterales la menor duda, Otros, coma el gasoducto al Brasil, no nos cabe extranjeros. Sin seran objeto del interes de inversionistas de ellos, que -embargo, quedan varios proyectos y componentes y t6cnicas de parte de precisan nuevas contribuciones financieras al financiamiento de estos la comunidad internacional. Su aporte una prueba mas de su proyectos y programas prioritarios serl compromiso con el desarrollo de Bolivia. la importancia crucial que tienen para Cabe tambien reiterar an apoyo a Bolivia las contribuciones de la asistencia externa nuestros acuciantes problemas de balanza de pagoc, del mismo de modo, ratif icamos nuestro interes en llevar a cabo operaciones - canje de deuda por desarrollo alternativo y medio ambiente. una confesion. Cuando a Al concluir mi intervencifn debo hacer junto a lIa pocos meses de asumir el gobierno decidimos,la reuni6n del Grupo personeros del Banco Mundial, realizar estar listos a Consultivo en diciembre, tuvimos el temor de no en respaldo de . tiempo y no poder ofrecer hechos concretos nuestras ideas. Sin embargo, tomamos la decisi6n, convencidos de de poder la viabilidad y solidez de nuestras propuestas y seguros futuro confianza y esperanza en un compartir con ustedes nuestra tarea preparatoria brillante para Bolivia. Hemos cumplido nuestra a un acuerdo con el FMI. a tiempo y a) mismo tiempo hemos llegado del poder El gobierno ha conducido una restructuracifn profunda de las empresas ejecutivo y hemos racionalizado el personal y algunas de alto costo publicas. Estas son pruebas elocuentes, en la conduccifn del politico, de nuestro compromiso y seriedad pato. estos dos cortos dias los Esperamos haber logrado comunicarles en programa de nuevos conceptos y las prioridades de nuestro decidido apoyo durante gobierno y esperamos poder contar con su nuestros socios y los pr6ximos cuatro afios. Los consideramos nuestro exito serA companieros en este desafio y contamos con que tambien el de ustedes. No quisiera concluir mi intervencifn sin expresar nuestro reconocimiento al presidents de la reuni6n Sr. Abe por la acertada conducci6n de las sesiones. Al personal del Banco Mundial, en especial a Noriko, Denis, Connie, Dan y Vicente y a los funcionarios de otras divisiones y de las otras instituciones que nos colaboraron en la realizaci6n de ests evento. Y un reconocimiento particular a todos y cada uno de los participantes *que contribuyeron y contribuir&n al 6xito de esta reunion.. Muchas gracias.  Annex I Don. YtSOR 500 VXc3135D3T OONSTxuOI0U1L DR LI USPUBLICA DS DOLXVLA Washiagtonl D3C Deo_nbo 9 - LI, I993 A nombre del Cobierno de Bolivia doseo agradecor a lon organizadoras y a lo roepro.sntant.s de lou diferontos gobiornos amigos y orqanismo. internacionalo por au pressncJa y por la gerntilsaz escuchar durant- .stos tree dias de intenso trabajo, de el programa quo as propon ojecutar la actual administracifn gubernamental. En el uubral del teroer milenio, Bolivia se ancuentra ante un gran desatlo, quo es el oambic radical, poro responsablo hacia una sociedad =As justa y solidaria, haeLa un pals vordadorammnt de-wcratico, participativo y con una econolsa en constante crecisionto, austentada an l astuorzo do lea propios boliviano. y en la utilizacifn eficionto de nu stros reourson. El prop6sito do la transfornacifnquo pretendemos llevar a cabo em dejar atr6s, el estancamiento oconduico, la falta de emplo, los baJoa salarioa, la deficiento .ducacifn, iA mala salud, la corrupci6n y la dependoncia do la cazridad internacional. El caumblo qua domnda el bolivlano de hoy, independis nte da mu identidad social, *conbuica o cultural, so el r.conocimiontode au derecho de nor sujeto y aotor de au propio destino, para quo se Is tome an cuenta on lax decIsion** quo afectan mu vida y para quo se le bags bon.iciaric del pstriaonio p0blico, reunido a lo largo de 6sz de usedio siglo y quo desafortunadauente, s6lo han aprovechado un pequefo grupo de bur6oratas y politicos.  I:n resumen, e1 cambio quo demanda la sociedad boliviana as participacifn popular, ajors visible de Jsu condiciones de vida, futuro ciarto y dignidad. Para atender satas demanGas, el gobierno actual ost& eofhado an Ilevar a cabo uma deseentralizacifn real, a trav6s de la transferoncia del poder poiltico y econ6mico a la sociodad como bass para una mayor justials y oquidad. La descentralizacifn del poder politico significa un cambio on .l ro] del Estado y la devoluaoin del podaer deoisifn de al ciudadano an sun orqanizacionesde base, su oounidades, y sun gobierno locala.. La primera wedida quo murgi6 de *stas tareas ha sido la reformsa del Poder Ejecutivo, coma etap inicialdo la madernizacifn del Estado La descentralizacifn del poder oconftico ofectiviza, so a trav6s do la capitallzaci6n y la dearcratizaci6n de la propisdad de lax ampresa. pdblicas. Rate proceso, pezmitirz la transferuncia efectiva a is comunidad do lo, bonoficios dGooto patrimonio y la apropiacifn real de lax acciones de eatas epremas por todos la bolivianos. Con .l prop6sito do genear las condiciones par& cumplir con estos objetitb ,1 Gobiorno ha dado loc primeros paso., mediant. la racionalizaci6n administrativado las emproes publica .. La base de la dexo.ntralizaonif politica y ocon6mica On i participacifn popular. Bata as neamsaria pars la definici6n de lam demandam de la poblaci6n, para la orientacifn de lo, recurso de Inversi6n social y pars la fiscaliseoift do lam ociones doetinadas a reoolver problems comunosdo mu barrio. municipio a cauunidad. R3 nuevo gobierno ha iniciado au mandato bajo estas premisas y como me diuo me ban realizado algunas acciones en isto sentido. sin embargo, debe resaltarse ui bacho quo posiblacnt@ rzfloia con mAu a prasicifn qua cualquier otro, la voluntad del cambio. EZ la decisifn do otorgar la iinmatidura de la Vicepresidencia de la Repibl ica a un ciudadaho de origen indigena. rate hecho trascendental irplica *1 r.conooimiento de nuestra diversidad cultural y tnica despu6s de 500 atla do mrginamiento. Estanoo seguros de transitar por la ruts indicada haoia cl progreso y el bienestar coleotivas an una sociedad pluricultural y multidtnica. En osta ooniwecin valoramow la cooperaci6n do la comunidad internaioanal, quienes con docisifn han apoyado los esfuerzom realizados por loo boliviaons en el proceso de ajuwte ostructural de nuestra *oojosia. A pesar de los loqros aicent-dou, Bolivia continua siondo e1 palo Mss pobre del Continents. 1o obotante, ostamos eap4tadas an salir de esta postracifn y lloqar al ucmento en qua no tengamo. quo buacar la cooperaci6n int.rnmclonal. Sin eobargo, a1 prosent. a fin de cumplir con osts gigant4eso tarea,es ab.olutaoente necesaric y apremiante el respaldo *oan6Uioo y politico qua pueda otorgar a Bolivia la comunidad int.znaaional. on un marco de solidaridad con los pueblos quo hoy pr.tenmAn galir d&finitivaemti de au eatado de pobraza y ofrocer a mU blio@ un mejor future. a~~~~~~~~~~  Annex J CONSULTATIVE GROUP FOR BOLIVIA WASHINGTON, DECEMBER 9-11, 1993 STATEMENT BY THE WORLD BANK ON ITS ASSISTANCE TO BOLIVIA BY CONSTANCE BERNARD, WORLD BANK DELEGATION VICE PRESIDENT CARDENAS, MINISTERS, LADIES AND GENTLEMEN: -DURING THE LAST FEW DAYS, THE BOLIVIAN GOVERNMENTHAS MADE THE CASE THAT IT CAN'T HAVE A "BUSINESS AS USUAL" APPROACH FROM THE INTERNATIONAL COMMUNITY. IT NEEDS AN EXTRAORDINARY EFFORT TO LAUNCH BOLIVIA ON AN ACCELERATED PATH OF HUMAN DEVELOPMENT AND ECONOMIC GROWTH. AS A FIRST STEP, WE ESTIMATE THAT BETWEEN $550 AND 600 MILLION IN EXTERNAL DISBURSEMENTS OF OFFICIAL AID IS REQUIRED NEXT YEAR. ACCORDINGLY1 WE ASK YOU TO INCLUDE FIRST IN YOUR PRESENTATION A FIRM ESTIMATE OF WHAT YOU CAN DISBURSE AND WHAT YOU CAN COMMIT IN CALENDAR YEAR 1994. THE GOVERNMENT HAS ALSO PRESENTED A NUMBER OF INNOVATIVE PROGRAMS IN THE SOCIAL ENVIRONMENTAL AND ECONOMIC AREAS. PLEASE LET THEM KNOW IF YOU CAN AND HOW YOU CAN SUPPORT THESE PROGRAMS. IF YOU CAN QUANTIFY THIS SUPPORT, SO MUCH THE BETTER, BUT EVEN A QUALITATIVE EXPRESSION WILL PROVIDE HELPFUL FEEDBACK TO THE GOVERNMENT IN REGARD TO YOUR INTERESTS AND PRIORITIES. REMEMBER TOO THAT, GIVEN THE FRAGILITY OF THE BOLIVIAN ECONOMY, CONCESSION TERMS FOR YOUR RESOURCES CONTINUE TO BE CRITICAL.  TO TAKE ADVANTAGE OF THE UNIQUE OPPORTUNITY BOLIVIA IS PRESENTING US, THE WORLD BANK'S ASSISTANCE PROGRAM IS FRONT-LOADING IDA RESOURCES AVAILABLE TO BOLIVIA DURING THE NEXT FEW YEARS. ALTHOUGH WE NORMALLY COMMIT ON THE ORDER OF ABOUT $70 MILLION A YEAR, LAST YEAR WE COMMITTED ABOUT $100 MILLION, AND COMMITMENTS FOR THE NEXT 12 MONTHS ARE EXPECTED TO BE ABOUT US$160 MILLION, OR MORE THAN DOUBLE NORMAL LEVELS. IF ALL GOES WELL, DISBURSEMENTS PROGRAMMED FOR NEXT YEAR WILL EXCEED US$100 MILLION. THEREAFTER, COMMITMENTS WILL HAVE TO DROP TO LOWER LEVELS, UNLESS FOR SOME REASON GLOBAL IDA RESOURCES INCREASE. THIS LEVEL OF SUPPORT IS .PREDICATED ON CERTAIN BASIC ASSUMPTIONS ABOUT THE PUBLIC INVESTMENT PROGRAM THAT IS CONSISTENT WITH CONTINUING FISCAL DISCIPLINE AND THE MACROECONOMIC PROGRAM DISCUSSED WITH THE IMF, THAT ITS PROJECTS ARE SELECTED AND EVALUATED ACCORDING TO STRICT ECONOMIC CRITERIA, THAT IT REFLECTS A SUBSTANTIAL SHIFT AWAY FROM DIRECT INVESTMENT IN THE PRODUCTIVE SECTORS, AND THAT BASIC SOCIAL SERVICES AND ECONOMIC INFRASTRUCTURE WILL BE GIVEN TOP PRIORITY. WE HAVE ALSO CLARIFIED THE FOCUS OF OUR PROGRAM -- WE WANT TO ATTACK THE BASIC CAUSES OF THE POVERTY WHICH AFFLICTS THE MAJORITY OF BOLIVIANS. TO DO THIS, WE BELIEVE THAT THE GOVERNMENT'S CAPITALIZATION PROGRAM IS AS IMPORTANT AN ELEMENT AS ITS SOCIAL PROGRAMS, SINCE IT IS DESIGNED TO PROMOTE ECONOMIC GROWTH AND EMPLOYMENT AND TO FREE UP PUBLIC SECTOR RESOURCES FOR REDIRECTION TO SOCIAL NEEDS. WE WILL SUPPORT THIS PROGRAM THROUGH A POLICY OPERATION, AS WELL AS THROUGH SECTOR-SPECIFIC OPERATIONS IN HYDROCARBONS AND POWER. THE MAIN FOCUS OF THESE OPERATIONS IS TO HELP THE GOVERNMENT MEET ITS TECHNICZAL ASSISTANCE REQUIREMENTS A" TO FUND THE TRANSITION COSTS. OTHER OPERATIONS DESIGNED TO HELP THE GOVERNMENT IMPROVE THE LEGAL AND POLICY FRAMEWORKIN PRODUCTIVE SECTORS INCLUDE, FOR EXAMPLE, A LAND ADMINISTRATION PROJECT, WHICH WILL HOPEFULLY PROVIDE FOR MORE EFFICIENT USE OF ONE OF BOLIVIA'S MOST IMPORTANT RESOURCES. THE IFC IS ALSO PLANNING AN EXPANDED ROLE IN PRIVATE SECTOR DEVELOPMENT IN BOLIVIA. IN THE PAST, IT HAS INVESTED MAINLY IN THE MINING AND ENERGY SECTORS AND IN FINANCIAL SERVICES. ITS CURRENT STRATEGY IS TO FOCUS ON EXPORT- AND PRIVATIZATION-ORIENTED STRATEGIES AS WELL AS PROVISION OF ADVISORY SERVICES. ASSUMING THE CAPITALIZATION PROGRAM MOVES FORWARDAND APPROPRIATE INVESTMENT OPPORTUNITIES DEVELOP, IFC COULD INVEST AS MUCH AS $200-300 MILLION OVER THE NEXT FEW YEARS. WE HAVE ALSO PROGRAMMEDA SIGNIFICANT EXPANSION IN RESOURCES FOR HUMAN RESOURCE DEVELOPMENT; THIS IS THE AREA OF GREATEST GROWTH IN OUR PORTFOLIO. IN ADDITION TO COMMITTING ABOUT $90 MILLION THIS PAST YEAR FOR THE CHILD NUTRITION AND THE SOCIAL INVESTMENT FUND, WE ALSO PLAN TO PROVIDE SOME $40 MILLION FOR EDUCATION REFORMr AND $40 MILLION FOR MUNICIPAL DEVELOPMENT IN 1994. PROJECTS ARE ALSO UNDER PREPARATION DIRECTED AT REDUCING RURAL POVERTY AND IMPROVING RURAL WATER AND SANITATION. WITHIN THE NEXT FEW YEARS, WE ALSO HOPE TO PROVIDE ADDITIONAL RESOURCES FOR PRIMARY HEALTH CARE. THE BANK IS ALSO SUPPORTING ENVIRONMENTALLY SUSTAINABLE DEVELOPMENT IN BOLIVIA THROUGH A TECHNICAL ASSISTANCE PROGRAM THAT WILL HELP THE GOVERNMENT TO DEVELOP AND IMPLEMENT SECTORAL ENVIRONMENTAL REGULATIONS. IN ADDITION, A NEW PROJECT TO IMPROVE ENVIRONMENTAL REGULATION AND CONTROL IN INDUSTRY AND MINING SECTOR IS UNDER PREPARATION, WITH ASSISTANCE FROM THE SWEDISH GOVERNMENT. PERHAPS MORE IMPORTANT, HOWEVER, IS OUR APPROACH TO PROJECT DEVELOPMENT--THE SUSTAINABLE DEVELOPMENT ASPECTS AND ENVIRONMENTAL IMPACT ARE ANALYZED AS A MATTER OF COURSE IN EVERY PROJECT THAT WE DO. WE APPLAUD THE HIGH PRIORITY WHICH THIS GOVERNMENT IS GIVING TO ENVIRONMENTAL ISSUES, AND HOPE THAT MANY OTHER COUNTRIES WILL FOLLOW BOLIVIA'S LEADERSHIP IN THIS AREA. WE WOULD LIKE TO EMPHASIZE THE IMPORTANCE OF AND OUR SUPPORT FOR THE GOVERNMENTVS PROGRAMS FOR CIVIL SERVICE AND JUDICIAL REFORM. THE QUALITY OF THESE INSTITUTIONS IS ESSENTIAL IF THE GOVERNMENT IS TO IMPLEMENT AND SUSTAIN THE AMBITIOUS PROGRAMS DESCRIBED HERE OVER THE LAST FEW DAYS. WE ENCOURAGE ALL OF YOU TO CONSIDER HOW YOU CAN PROVIDE SUPPORT TO THESE PROGRAMS AS WELL. WE PLAN, AS MUCH AS IS FEASIBLE, TO CHANNEL INSTITUTION-BUILDING EFFORTS UNDER ALL OUR PROJECTS TROUGH THE CIVIL SERVICE PROGRAM. MOREOVER, WE ARE PREPARING, WITH THE GOVERNMENT OF BOLIVIA AND OTHER INTERESTED DONORS, SPECIFIC PROJECTS THAT WILL SUPPORT THE IMPLEMENTATION OF THE CIVIL SERVICE AND JUDICIAL REFORM PROGRAMS IN THE COMING YEARS. WE HOPE THAT OTHER DONORS WILL BE ABLE TO SUPPORT THESE PROGRAMS AS WELL.  FINALLY, WE WILL LIKE TO UNDERLINE THE NEED TO CONTINUE STRENGTHENING OUR COORDINATION EFFORTS. AT PRESENT A MAJORITY OF BANK PROJECTS IN BOLIVIA ARE PREPARED AND IMPLEMENTED IN COOPERATION WITH DONORS. WE BELIEVE THESE CO-FINANCING EFFORTS ARE AN EXCELLENT WAY BOTH TO HELP INSURE THAT SCARCE INTERNATIONAL RESOURCES ARE USED IN THE MOST EFFECTIVE WAY POSSIBLE. WE VERY MUCH APPRECIATE THE CLOSE WORKING RELATIONSHIP WITH COLLEAGUES AT MULTILATERAL AND BILATERAL INSTITUTIONS WHICH HAVE LED TO HIGHER QUALITY AND MORE FOCUSED DEVELOPMENT OBJECTIVES. ONE OF THE MOST INTERESTING RECENT EXAMPLES HAS BEEN OUR WORK TOGETHER IN SUPPORT OF THE GOVERNMENT'S EDUCATION REFORM. WE ARE STRONGLY COMMITTED TO COORDINATION AND CO-FINANCING EFFORTS WITH OUR BILATERAL AND MULTILATERAL COLLEAGUES AS THE BEST WAY WE CAN BE OF ASSISTANCE TO BOLIVIA. THANK YOU VERY MUCH. -~~~~~~~-  Annex K FINAL CONSULTATIVEGROUP MEETING FOR BOLIVIA Washington D.C., December 9-11, 1993 CLOSING STATEMENT BY MR. YOSHIAKI ABE, CHAIRMAN, WORLD BANK Mr. Vice-President, Distinguished Delegates, Ladies and Gentlemen: We have come to the conclusion of our meeting. Looking back on our work oVer these last three days, I am satisfied that we have carried out the tasks which we set for ourselves at the beginning of the meeting. The sessions have been informative. On behalf of all of us gathered here, I would like to thank the Government for their efforts. Each consultative group is in some sense unique, but such a description is especially appropriate for this meeting. We have been presented with a Government program that will revolutionize the role of the State by divestingthe public sector of productive activities better carried out by the private sector and launching the first serious effort to deliver a reasonable quality of essential social services to all Bolivian The Government's program is also unique in putting sustainable development and environment on an equal footing with conventional economic and social development. Finally, it is unique in making popular participation a cornerstone of its efforts to improve the quality and coverage of education, basic health services and local infrastructure. *7  -2- Buildingon a sustainedprocess of economicand socialreform that has survived Governments, present administrationhas developedan three democratically-elected the and innovative ambitiousprogramfor economicand socialreform. The core themes public participationand containedin the Government'sprogram-capitalization, sustainabledevelopment-presenta real opportunityto promotesustainableand equitable growthin Bolivia. We must nowmoveto take full advantageof such an opportunity. The participantsof this ConsultativeGroup concurredthat the foundation for sustainedgrowthis continuedsound economicmanagement. Althoughit inherited a situation,the Governmenthas indicatedits intention to difficultmacroeconomic maintainstrict fiscal discipline. Participantsexpressedtheir appreciationfor the Government'scomprehensive presentation of its proposalsfor public investments the comingyears. However, in delegatesexpressedconcern about the size of the overallprogram and urged the Governmentto establishpriorities consistentwith realisticassessmentsabout available external resources,with the overallfiscal program,and with its ownabsorptivecapacitia& The Governmenthas stressed that Boliviamust strengthenits implementationof human development. Improvingthe qualityof socialservices-education,health and water and sanitation-willbe essential to this goal. Sinceestablishingthe stabitizaton program in 1985,Boliviahas not yet made adequate investmentsin the social sectors. in Nowsuch investmentsmust begin. Improvements the deliveryof basic socialservices participationwill give all Bolivians and a "seat at the table" through increased community  -3 - a voice in determining their futures. Consistent with this increased emphasis on investment in the social sectors, we must rermemberthat, whenever possible, financing must come on concessional terms. The Government has discussed its initial efforts towards reforming the executive branch. The establishment of three key ministries creates a basis on which priorities can be set and appropriate sectoral policies and programs can be developed. However, coordination among the ministries may need strengthening and the appropriate role for the State more clearly defined. The Government must create the necessary space for the development of private sector participation that will be the key to Bolivia's future social and economic development. In the productive sectors, the Government must continue to work to establish an enabling environment to encourage private sector activity, including the formulation of coherent sectoral policies, and providing effective regulation of such policies. To meet its challenging agenda, the Government must become more efficient i its project selection, evaluation, and implementation. The intention of the Government to accelerate the implementation of the civil service reform program is an essential step towards achieving an effective Government. The Bolivian people need and deserve an efficient, effective civil service. Improvement must come quickly. Given todays limited donor resources we must be able to show that Bolivia is usin its available resources welL The Government's chaRengingagenda also increases the importance of better coordination of donor support. Delegates affirm their commitment to continuing and  -4 - improving coordination, especially with respect to key progrnmq such as education reform and rural development. During this morning's meeting, we discussed annual external financing requirements for 1994. I am pleased to report that, on the basis of the statements made by the delegates, we can expect total commitments of about USS 1 billion, most of it on concessional terms, next year. In addition, the Government expects commitments of an additional US$ 50-60 million from donors not present at this meeting. These commitments reflect the confidence donors have in the Government's commitment to the economic and social program presented during this meeting. We plan to reconvene the group next year. I hope to see you all at that time. Between now and then I would ask all of you to carefully watch developments in Bolivia. If the Government is successful in achieving its ambitious goals over the next year, I would urge all of you to be prepared to increase your support for these efforts. In closing, I would like to thank all the attendants for their constructive participation and suppo.  Annex L FOR IMMEDIATE RELEASE World Bank 1818 H Street,N.W.,Washington, D.C.20433.U.S.A. * Telephone: (202)477-1234 BANK NEWS RELEASE December 11, 1993 Contact: Ciro Gamarra (202) 473-8721 EIGHTH CONSULTATIVE GROUPMEETING EXPRESSED STRONGSUPPORT FOR BOLIVIA Washington,D.C., December 11, 1993-Representativesof organizationsthat attended the Eighth ConsultativeGroup 23 doLiorcountries and international for Bolivia in WashingtonD.C. on December 9 to 11, under sponsorship of the World Bank, strongly economic,human and sustainable development plans. supported the Government's The meeting was chaired by Mr. YoshiakiAbe, Director of Bolivia, Colombia and the Caribbean) of the World Bank's Country Department m (for Latin America and the Caribbean Regional Office. The Bolivian Delegation was led by Fernando Blanes, Minister Development,and included Fernando Romero, Minister of Human of Finance and Economic Development;Jose Guillermo Justiniano, Minister of Sustainable Developmentand the Environment; Secretary of Finance, and other governmentofficials. The Vice Mr. Fernando Cossm, President, Mr. Vt tor Hugo Crdenas, attended the meeting on Saturday. The meeting reviewed(1) the new vision of the reorganized key ministries; (2) recent economic performance; (3) investment executivebranch and roles of the programs and projects for economic, sociaLsustainable and alternative development. The reorganization of the executivebranch reflects the Government's strengtheningimplementation of human developmentand commitment to assuring sustainabilityof economic and social development. The establishment of the three key ministries Economic Development, Human Development, and Sustainable (Ministries of Finance and Development and the Environment) creates a basis on which coherent and integrated sectoral policies and programs can be developed. The Government stressed its continued commitment to maintaining promoting growth through the capitalization program and related economic stability and the private sector and to focus public sector interventions legal reforms to expand the role of on improvingphysicaland social infrastructure. In spite of deteriorating terms of trade for the Bolivia'smain projected at slightlyabove 3 percent in 1993 and inflation exports, real GDP growthis is expected to be about 10 percent for the year.  Faced with a difficult fiscal situation inherited from the previous administration, Government is committed'to return the economry a stable macroeconomic the to platform. They have begun to make a fiscal adjustment through strict control of expenditures including downsizingthe public sector, an important step toward the capitalization of the a program of major public enterprises and the new role of the state. The donor delegates stronglysupported the Govermnent's commitment to remove sector from productive activities and to concentrate on improvingessential infrastructure the public basic social services. The delegates also applauded the essential importance of and providing expanding capital investmentas a key ingredient to sustaining economic growth.-In this connection, human participants welcomed the Government's strong focus on decentralization and the popular participation. The participants stressed the utmost importance of sound macroeconomic management provisionof enabling environmentconducive to private sector investment. Given and implementation and disbursement in the past, particularly'in the social sector, a the slow considerable improvementin project implementation is required. The Government presented an ambitious program aiming at dramatic social and transformation of the country. The program for economic development places an economic emphasis on economic infrastructure, particularly investmentsin roads. The Govermmentintends to shift more resources towards the social sector, thus increasing its share in the total public current average 18% to 50% over the next few years. investment from the The proposed program for sustainable development aims at improvingsecurity increasing knowledgeand protection of existingnatural resources and institutional of land tenure, strengthening. With respect to alternative development, several delegates stressed the importance of a United Nations-led study of new approaches. The donor community expressed its support for the government's objective of accelerated more equitable growth. Given the increasinglyscarce concessional external resources, and priorities was stressed. The donors announced that they expect to commit about US$1 the need to set billion in 1994. In addition, the Government estimates that approxmately US$60 million can be expected donors not present at the meeting. from other Members of the Consultative Group attending the meeing were BraziL Canada, Germany,Japan, Netherlands, Spain, Sweden, Switzerland,United Kingdom, and France, United States. Denmark and Italy attended as observers. Also represented were the Andean Development Corporation, International Fund Agricultural Development, Inter-AmericanDevelopment Bank, Inter-American Institute for Corporation on Agriculture, International Monetary Fund, Pan American Health for Nations Development Program, United Nations International Drug Program, and Organization, United United Nations Children's Fund. -0 -