Bolivia - Current economic position and prospects

Report No. 786a-BO i C P Current Economic Position and Prospects of Bolivia Juiy 28, 1975 Latin America and the Caribbean Regional Office Not for Public Use Document of the International Bank for Reconstruction and Development =l=l This report was prepared for official use only by the Bank Group. It may not be published, quoted ot ated without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCY EQUIVALENTS Currency Unit Bolivian Peso ($b) Us$1.00 = $b 20.00 $bl.00 = US$ 0.05 $b 1 million US$ 50,000 The exchange rate of $b20 = US$1 was used throughout this report, except where indicated otherwise.  This report is based on the findings of a mission to Bolivia in September-October 1974, com- posed of: Joerg U. Richter (Chief of Mission) Ms. Elde Meldau (Fiscal Economist) Vasilis Panoutsopoulos (Statistical Economist)   TABLE OF CONTENTS Page No. MAP COUNTRY DATA SUMMARY AND CONCLUSIONS .............................. i - vi I. RECENT GROWTH AND DEVELOPMENT CONSTRAINTS ............ 1 A. Output, Income and Expenditure .... .............. 1 B. Poverty and Income Inequality .... ............... 3 C. Saving and Investment ........................... 6 II. DEVELOPMENT POLICY ISSUES ............................ 7 A. Public Sector Finances ..... ..................... 8 1. Introduction . .. .............................. 8 2. Recent Developments ..... ................. 9 (a) Current Revenues ....................... 11 (b) Current Expenditures .... ............... 11 (c) Public Savings ..... .................. .. 11 3. Public Investment ...... ...................... 12 4. Public Finances in 1974 .... ................ 13 B. Money and Credit ................ 13 C. Balance of Payments, Exchange Rate and External Public Debt ................................... 14 1. Merchandise Trade, Services and Current Account ..................... ............. 16 2. Capital Flows and External Public Debt ..... 17 III. DEVELOPMENT PROSPECTS ................................ 19 A. Policy Requirements for Faster Growth .... ....... 19 B. Near Term Outlook ............................... 21 C. Medium-Term Prospects ..... ...................... 22 1. Aggregate Growth ........... .. .............. 22 2. Prospects for Major Sectors ........ ........ 23 (a) Hydrocarbons .......................... 23 (b) Mining ................................ 25 (c) Agriculture ........................... 27 (d) Manufacturing .......................... 28 3. Investment Requirements and Public Investment ............. .. ................ 30 4. Financing Public Investment ........ ........ 32 5. Balance of Payments Prospects and External Capital Requirements ........ .. ........... 36 (a) Export Prospects ...................... 36 (b) Import Requirements .... ............... 37 (c) External Capital Requirements .... ..... 37 (d) External Public Debt and Credit- worthiness ........................... 38 STATISTICAL APPENDIX  TEXT TABLES Table 1: Sources of Output Growth, 1971-74 2: Allocation of Resources, 1971-74 3: Income Distribution Indicators, 1974 4: Public Sector Finances, 1968-74 5: Central Government Current Revenues and Expenditures, 1968-74 6: Balance of Payments, 1968-74 7: Value, Composition and Growth of Merchandise Exports and Imports, 1968-74 8: Terms of External Public Debt Contracted during 1969-73 9: Alternative Growth Patterns, 1975-80 10: Hydrocarbon Development Options, 1975-80 11: Gross Domestic Investment and Its Financing, 1968-73, 1974 and 1975-80 12: Public Investment, 1969-74 and 1975-80 13: Public Finance Alternatives, 1975-80 14: Projected Public Sector Foreign Exchange Requirements, 1975-80 15: Balance of Payments Alternatives, 1975-80  * ~ ~~~ / O : <~~ j X K o. O * KY~~~~~~~~~~~~~~~~~~~~~~' E% - - '= , '' :-->00 ; 2; '0 >7 i~~~~~~~~~~~~~~~~~~~~'l , :.- , a ,_ ^ s x -~~~~~~~t~   Page 1 of 2 pages COUNTRY DATA - BOLIVIA AREA 2/ POPULATION DENSITY i,09(1,000 ktr- 5,470 thousand (1974 estimate) 5.0 per km2/ Rate of Growth:2.6 (from 1960to 1974) 146.7 per kma2/of potentially arable land POPULATION CHARACTERISTICS (1970) HEALTH (1970) Crude Birth Rate (per 1,000) 44 Population per physician 2,300 Crude Death Rate (per 1,000) 19 Population per hospital bed 490 Infant Mortality (per 1,000 live births) 154 INCOME DISTRIBUTION (1970) DISTRIBUTION OF LAND OWNERSHIP (1970) % of national income, higrest quintile 59 % owned by top 10% of owners lowest quintile 4 % owned by smallest 10% of owners ACCESS TO PIPED WATER (1970) ACCESS TO ELECTRICITY (1970) % of population - urban 35 % of population - urban about 90 - rural 1 - rural about 5 NUTRITION (1970) EDUCATION (1970) Calorie intake as 7 of requirements 70 Adult literacy rate % 38 Per capita protein intake(grams per day) 46 Primary school enrollment % 96 1/ GNP PER CAPITA in 1974 US $ 255 GROSS NATIONAL PRODUCT IN 1974 ANNUAL RATE OF GROWTH (%. constant 1973 prices) US $ Mln. % 1968-73 1974 GNP at Market Prices 1,653 1 4.8 4.9 Gross Domestic Investment 281 17.0 2.1 25.7 Gross National Saving 364 22.0 3.5 79.1 Current Account Balance 51 3.1 Exports of Goods, NFS 577 34.9 3.2 /2 39.7 2 Imports of Goods, NFS 504 30.5 2.2 15.8 OUTPUT, LABOR FORCE AND PRODUCTIVITY IN 1974 Value Added (Market Prices) Employed Labor Force V. A. Per Worker 1973 US Mln. % Thousands % 1973 US $ % Agriculture 235 21.5 1,383 64.4 170 46.4 Miming 1~~~35 195 2.6 2,364 464.4 HyMirocarbnns/ 130 11.9 o.2 15,200 2,986.2 JndtsrocL4I1 _ 761 72.0 240 11.2 587 115.3 Services 510 46.7 464 21.6 1,09 215.9 UnalIlocated________ Total/Average 1,092 100.0 2,147 100.0 509 100.0 GOVERNMENT FINANCE Public Sector Central Government ( b$ Mln.) fG( b Mln.) % of GDP 1974 1974 1974 1974 Current Receipts 5 3,305 9.8 3,138 9.3 Current Expenditur < 14.5 4 763 14.1 Current Surplus 3,004 89 Capital Expenditures 3,393 10.1 680 2.0 External Assistance (net) 991 2.9 857 2.5 1/ The Per Capita GNP estimate is at 1974 market prices, calculated by the same conversion technique as the 1972 World Atlas. All other conversions to dollars in this table are at 20.00 Bolivian pesos to 1 U.S. dollar. 2/ Terms-of-trade adjusted. 5/ Extraction and refining. M/ Manufacturing and construction.