Bolivia - Current economic position and prospects

CIR1aTuuIlG COPI RETURN, RESTRCTED REPORTS D Report No. WH-138a WITHIN ONE WEEK This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as represepting their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROSPECTS OF BOLIVIA July 13, 1964 Department of Operations Western Hemisphere CURRENCY EQUIVALENTS U.S. $1 = 11. 88 Bolivian pesos 1 Bolivian peso = U.S. 10. 08 1 million Bolivian pesos = U. S. $84, 170 TABIE OF GNTENTS Page No. BASIC DATA SUl IARY AND CONCLUSIONS ii INTRODUCTION i I. ECONOMIC GROWTH i A. G.D.P., Consumption and Investment i B. Agriculture 2 C. Industry 3 D. Minini E. Petroleum 7 F. Electric Power 8 G. Transportntion 8 II. FINANTAL SITTATTON 9 A. Moneyr an Cedi 9 B. Publicr- Finances in C. Wages and Prices1 [ TTT. Epor ATsTAT. mpTTTAmTÅ 12 fl. J'.J. i CLLk .L;jj.J V.ý M. Balance ofPayments-13 ri. rld and Fcrve n¶ tT Å tTTTf IT' 'S ~ l Å T .fNn11Tt"KT A T«n .LV P.LNNLi.ING, IN VESiNT AD FRIGNUl ID.J A v. R r F R F « RE IGN EXrrl ANGE, EARNINGS 15.> CREDI TWORTHINESS Area - 19,470 square miles Population 1963 (estimate) - 4.1 million Gross Domestic Product 1962 (1958 prices) US$398 million. Per Capita G.D.P. 1962 - Abdut US$97 Origin of G.D.P. 1962 Per Cent of G.D.P. Agriculture 35 Commerce and Transport 21 Mining and Petroleum 13 Manufacturing 12 Other 19 Cost of Living Per Cent Increase 1962 5 1963 -1 Balance of Payments (million dollars) 1962 1963 Exports f.o.b. 200 71.9 Imports f.o.b. -91.5 -104.5 Other Services -18. -22.6 Current balance 2 Long-term official canital 36.3 55.9 Private capital movements 8.9 5.0 Errors and omision.s (net) -2a7 .4 Surplus or deficit -h.1 Commodity Concentration of Exports Per Cent of Exports to2 1963 Tin 7 9 Gross Foreign Exchange Reserves (End of Year) 1962 1963 Expenditures 506 Deficit -117 Domestic Borrowing (net) 28 [5 External Public Debt as of December 31, 1963 Million Dollars Av CL vuv UClLA.Li12S C.L I e Of which undisbursed 37.1 1964 export earnings 19% - ii - SUMIMARY AND CONCLUSIONS 1 Bolivin's Gross Domistic Prodct annears to have been increasina in 1961 - 1963 at a somewhat higher rate than in immediately preceding vAnr- MnRt AnA-v- ntrs hnp hAn narmiltn and Mnnufnetunrin which has been slowly recovering from the disastrous decline in 1957. Ouintpu of the mining setor.n hnqa"ron Alowlyr asq fro n r vat mines have more than offset the decline and stagnation in the output of COMTROT. O. Meren r-a be n oinre ase 4- tbei -e of 4-nrnes h-t ~,nI'%II 15% of GDP, or of domestic savings, about 5% - 6%. These low domestic . G.V4..4L6 4LLV LJVIZ;,kl LJoy CAL1.L& LJ.%VW %JJ.L V.L%J..Ll -.C&J.UCJ.,LA in the form of grants to finance the large current deficits of the pub- Jlic ecor Th -L 1 M -the~VL1 Vubli seJ. UU1-.JA 14CAJ L O~ VJ.'Ly wwr'Al VC-.J .4_.L.LY offset by private savings. The persisting lack of confidence has also reuu u one wL-igueno ou 2v- o -_ue±V U rue n in liquid foreign assets. 3. The major problem in the public sector is the performance of the Government's mining enterprise, COUIBo. A multilateral effort to rehabilitate it by renewing old wornout machinery and reactivate the prospecting activity which had been dormant for ten years, was started in 1960 but has not been very successful. Continued labor difficulties and poor administrative practices have prevented new machinery ana technical assistance from bringing about substantial improvements in production. Since mid-1963 there have, however, been some signs of improvements and there is ground for expecting further improvements in 1964 and 1965. 4. Although the continuous drop in the output of COMIBOL was stopped in 1962, there was no sign of improvement of its finances. A very large cash deficit occurred, as in previous years, which was fi- nanced by the U.S. through counterpart funds. There was another, though smaller, deficit in 1963 and the prospects are not good for any marked improvement in 1964 despite the continued high price for tin. 5. Over recent years the financial position of the Central Govern- ment has improved, as revenues have increased faster than expenditures. This situation should continue as controls over expenditures are tightened and the administration of tax and customs collections improves. 6. The monetary expansion generated by the drawdown of counterpart fund balances contributed to an increase in import demand in 1962. There were also increases in the import shipment of equipment financed from abroad and of wheat under PLh80, a trend which continued in 1963. Despite - iii - some increase in the volume of mineral (xports and higher export prices this rise in imorts produced a laraer current account deficit than in previous yEars. This deficit-was financed by increased U.S. aid dis- bursements. 7. The future nrosnects for incrnasnd foreign exchange earnings are uncertain. In the short-run the main determinant is the successful comoletion of the rehabilitation of COMATBOL- but in the long-run it is possible that market considerations will become more important. Export aArnings of nhmi-. S79 illion hv 196 wnitl rism att.ainable These earnings represent a level slightly above that of 1957, but about 275 abovay that of' 19629 3. Bolivinas external public dea mounned to aot .$218 million as of December 31, 1963. Total debt service is scheduled at about $14 mil-iinn in 10A), 4 +n h .V11R million 4m 1 OAA Th, mc i payments would amount to about 19% and 22% of prospective export earnings prospects for substantial increases in foreign exchange earnings and for requirements, external financing for the bulk of Bolivia's investment 4uJ. . UUaILve 011JUu vLU VIV ' po LA,e1u. An vuese uLcuanaauce Bi.via should make every effort to increase public savings and to utilize ex- Uernal resources for projects Wnic1 Wil JvJUD v.L.LUvL;jWY OutrwvU Bolivia's economic position. INTRODUCT-ON Bolivia was discussed in a previous Bank report (WH-112a) issued September .Le I7u1 11 M Ilian (LULUiU Wi : 141db Q,AU U.".LJLU. U.L CLUJumoUWHIZA9p JV litical, social and economic, had led to general economic stagnation, that tne nationaliation 01 tne majur win mine. cUUpLeu WUL itvuw LUVu dlu interference in management had led to d clining output, and that only large economic and financial assistance from -he US had permitted uncnanged Levels of imports and consumption. The area in which the Government had managed to take decisive action was the fiscal. ina monetary field, where Tne earlier hyperinflation was arrested in 1956 wth the help of the US and IWF. Against this background of social and politicol unrest, economic stagnation and US subsidization, it is the purpose of this report to review developments in the period 1960-63 and to discuss the prospects of the Bolivian economy in the immediate future. 2. In the past three years only limited progress was made in the economic, social and political fields. Strong pressure from political and other interest groups continue to make orderly and effective government difficult, In addition, problems of union interference in management and lack of labor discipline tend to frustrate the efforts to rationalize state enterprises and to reduce confidence in the private sector of the economy. 3. Presidential elections were held late in May 1964 in which Dr. Paz Estenssoro was re-elected without opposition. These elections were marked by a break between the miners' union and the President and by the return of the armed forces to political importance with the Chief of the Air Force being elected Vice-President, I. ECONOMIC GROWTH A. G.D.P., Consumption and Investment 4. Available estimates indicate that real GDP reached a level in 1961 which was roughly equal to that attained in 1952. This was achieved after four years of continuous though.slow recovery with an average yearly growth rate of about 3%. This recovery continued, and nossiblv even ae. celerated slightly in 1962 and 1963. The bulk of the increase was contri- buted bv the aricultuiral q.fnr anei hx recverv in mantni-ring out.nut 5.Thezre. hasr beepn no imnprnupririf in t.he rna.ag rif ~~ or investment, Gross domestic savings have remained at a level of about 65 m %f GD)P- a level bK-ar nAdequateo t.%ior---------a laval of gross domestic investment has been maintained at about 15% of GDP with innet.me inflwo nrio- appea to ave r + ed. TI C+.e- ecpitliz f investment does not appear to have inprovedo The decapitalization of some state enterprises has continued, but large external credits to the state mining enterprise (COMIBOL), the state petroleum company (YFB) and the state railroads have helped to slow this process down in 1963. bomestic savings are generated only in the private sector while the public sector utilizes Central Bank credit and foreign grants to cover a substantial though slightly decreasing part of current expenditures. The rate of gross domestic savings'is unlikely to increase significantly unless mea- sures are taken to reduce public dissavings and private "conspicuous" consumption. 6. The productivity of future gross investment in the petroleum sector may improve considerably following the discovery of the Caranda oil and gas field (see paragraph 33), and there may be scope for some growth in manufacturing output on the basis of unutilized capacity and a limited injection of workina capital. To raise substantially the 'rowth potential of future investment it is, however, necessary to change the com- position of public investment on the basis of adenuate feasibility studies and to improve materially the climate f6r private investment in Bolivia. B. Agriculture 7. Available statistics indicate that agricultural output has in- creased over the nast fpw vpar. This iq partnair the %ase with cAe and sugar, commodities in which self-sufficency has now been practically attainpd- ThPrP. are- inehtnnnr t,hat prn"uiwA ncrea faehl in 1963, a trend that will probably continue in 1964. 8. With 72% of the gainfully employed population engaged in agri- niltivro - rn subsitenc farming -P - it is cla t n the future develop- ment of this sector is of vital importance, The plans of the Government are im r1 T 4-; - eA 4- -A - - .4 __A 00wol"S 111-IDIVI~ ulu SEcMIJIMenit o: larmers Irom the Altiplano and the Valles in the Eastern Lowlands. Experience so far has son thatsuchL migration is possi.le. Too little is stil known, however, about the soils and possible crops in the new agricultural regions nd ~ ~ temx1.,tiOQwLL4J.jIQL- Liure OuUpuT'O 9* The Government plans to move 50.00 persons over the next ten years. This would not reduce the number of persons in the "old" agricul- tural reins were there are signs of overpopulation. While a balance of incentives must be maintained in favor of migration, some attempts, and invetments, to improve agriculture on the Altiplano seem justified. v0. ine size and priorities of future investment in agriculture need to be carefully studied and determined, particularly the division of re- sources between colonization and improvements in already settled areas and between alternative colonization schemese Spontaneous settlement has been successful in Chapare and Santa Cruz, and there seem to be good prospects also for the planned settlement in the Beni, financed largely by an IDB loan. However, lack of knowledge about soils, climate, crops and markets make the return on heavy investment ,uncertain. If improved subsistence fanning is the end result it may be most easily and cheaply attained by imrveetso t1ne A~ltipjjlanuI. CUIU/V.L- u1l%rll OjLt(Ll.J_.Q I.5LCULJj than through organized investment intensive colonization. C. Industry 11. Industrial production appears to be recovering slowly from the recession 01 197, a trend that is liKely to continue in L7Ug. hue cemenU, sugar, cigarette and textile industries and the breweries appear to have been the most expansive industries. The cement industry is Denefitting from increased demand stemming from foreign aid financed construction pro- jects and capacity is being expanded. The sugar industry is also growing due to the Government's policy of national self-sufficiency in sugar. The textile industry and other consumer goods industries are experiencing severe competition from contraband, particularly from Brazil. 12. Despite the recovery in output there are still complaints about excess capacity in many firms. At the same time there is a lack of capital for working capital purposes. While it is likely that an injection of working capital i4ould lead to some increase in output, much of the excess capacity is economically unusable. The available slack in manufacturing industry appears to be fairly limited and the point will shortly be reached where increases in output will require new investment in plant and equipment. 13. The willingness of Bolivians or foreigners to invest their own capital in Bolivia is greatly reduced by political and economic insecurity and uncertainty and discrimination in the interpretation and application of laws and contracts. It has been difficult or impossible to find spon- sors with a minimum of equity capital, even in cases where US/AID feasi- bility studies have indicated substantial profitability, and US supervised credit has been available. 14. A private industrial investment bank was established in July 1963 on the initiative and with the assistance of the US and after protracted negotiations with the Government which was essentially nega- tively inclined. By March 31, 196., the Bank had received 89 credit applications of which it had approved 43 in a total amount of about $700,000. As a comparison it might be mentioned that about $900,000 in US supervised credits were extended in 1962. 15. One honeful develonment in recent years has been the. recention given the IDB $10 million credit granted the Bolivian Development Cor- poration (CBR). Al million of which was Parmarked for induqtrial aredit- Requests amounting to $8 million were received, most of them for capital investment. and the available fiind. were ranidl exhausted The of this credit operation was apparently due to the "umbrella effect" of K_l patiiato in _ th _praton of -B, a government agency Al sense of protection against government discrimination might be created tnoh thes nnrtoninet+e terf 17re so IDA in the privat and willingness to invest thereby restored in the shortrun, In the long 4111nnnfidonnr-nn h~*~y~ 'KA .hm~s 'Ywr ns V4 ++,wM.+- 1Vr c,+";,+ ____U. Go e. .e . attemp.*Af~JJ -.y _ etJA. impartiality in the interpretation and application of laws and contracts, ment, and to create a sense of certain6y and stability in business and Dc, Mnin I. ItrOduction1 WV A. %JUWtjJ'AV W- UJ141 L Q.11. ,VWJ..L A WY14c2 _LL 4.. 7ww and in 1961 as declining production by COMIBOL was more than offset by increases for- the meiu A -mal priat -ies The M1_ t impo_an increases occurred in zinc, wolfram and antimony while the output of tin 17. he upwar turend in private 3ector production appears to have continued in 1962 and 1963, while the decline in CONIBOL production was stopped in 1962 so that over-all production probably increased. Under the impact of substantial deliveries of machinery and parts, COYJBOL's production rose slightly in 1963, Given a tightening of management control over operations, there should be a considerable increase in CO-MIBOLts pro- duction in 100o, As there are no evident reasons to expect a drop in pro- duction in the private mines, there is hope for increased mineral output this year. 2, CHIBOL 18. The state.mining enterPris4 (COM,IBOL), which produces mainly tin, was created in 1952 to administer the three largest mining properties in Bolivia, which were expropriated in the wake of the Revolution. Its current problems are difficult and c6mplex. The size of its financial operations - expenditures in 1961 werg larger than those of the Central Government and amounted to over one-third of total public sector expendi- tures - gives it a dominating position in the whole economy. The utili- zation of Central Bank credit and of counterpart fund balances to finance its deficits - equivalent to $11 million in ^1961 and $9-10 million in 1962 - have a powerful inflationary impact while non-payment of bills or wages contribute to lack of working bapital in the private sector and to labor unrest. At the same time, its revolutionarv origin and its employ- ment potential have given it the status of a huge public works organization., This has meant expanding payrolls, rising wages. large losses on commissary goods, breakdown in discipline, etc., ,all factors contributing to an un- manageable rise in costs and decline in outout. Average direct cost of production (including depreciation, transportation and smelting costs) per pound of fine tin reached 1.L.0 in 1961 while the average market value was about $1.17 per pound, 19. The acute crisis in COMIBOL and its importance to the Bolivian economy led, in 1961, to the formation of a multi-nationa f'inanninn grnp composed of the IDB, the US, the Federal Republic of Germany and Argentina, to rehabilitate the company. The aim 'f this so-called Triangular Opera- tion, i txn.fln1di firqt to PTiminatx lossecP thronph the modernization of equipment and methods of production, and second, to conduct an inten- sive eSearch, for new ore -reserves'- in t.he old mines aned elsewhere in order to assure the longrun viability of the company. 20. All parties recognized at the time that a number of social and p^1 -; + A ^~ nl ' 1,A to. 1 s% _ -.1~ 4*lv,i i-hr v ~ + ~ r~ P +In'n "a-. habilitation scheme was to be successfully executed. These involved, veto right on management decisions, restoring the right of the management management in carrying out the rehabilitation program an internationally recruited Advaisory GroQup was: aLppontedU bY Lte JJ adA attLachedU to LAJ1'"L. 21. The results of the rehabilitation program ao far are disappuiu- ting. Very little progress was made in terms of production, costs or financial improvement during its first two years. Tnis was due In some measure to delays and lags in the ordering, delivery and installation of machinery and parts and in assembling competent staff. Particularly dis- turbing was the very small amount of'geological work carried out, in view of the very limited and poor ore reserves in several of the most important mines. 22. One major reason for the absence of definite progress was the failure of the Government to solve the social and political problemso While there were fewer and shorter strikes, due mainly to fairly prompt payment of wages and salaries, there was little improvement in labor discipline and interference of the labor unions in the management of the company continued. This came sharply to the fore in the politically in- spired strikes at the Catavi mine in August and December 1963. 23. The lack of decisiveness on the part of the Bolivian Government and lack of cooperation fromthe mine workers prompted the IDB to ask for definite commitments on the part of the President and the Cabinet, as well as the union, to take the necessary action before proceeding with the second year of the rehabilitation program. Assurances were received and the agreemept was signed in March 1963. Although the agreement did not contain any binding obligation on the part of Bolivia to undertake any specific actions, the Government showed considerably more strength in 1963, par- ticularly in dealing with the Catavi strikes, than it had ever shown before. The clear split between the President and the mine workers, which was al- ready apparent in late 1963. and which led to a comolete break during the election campaign of 1964, may make the Government more willing to take the necessary action in the future. It is also likely that the IDB will insist on specific commitments before proceeding with the third phase of the rehabilitation program. -6- 24. The situation now appears to be that some of the smaller mines have improved their 3erformance markedl and the downward trend in total production has been arrested, but the biggest mine Catavi, is deteriora- tine raoidlv. Catavi accounts for s ore t2 5% of COMIBOLt s production of tin, has direct production costs of $1.''0 lb. and monthly losses in the nrdnr nf tqOO_000. Tntal nroduction df.tin by all COMTBOL mines is reoorted to have reached about 15,400 tons in 1963 and some 16,500 may be produced in 19(). 94. The overall nonratinr deficit ? COBMTROL was rpdunod frem $10 million in 1962 to $5.5 million in 1963 due partly to sales from stocks ac- ti1uated during n strike on the railrna - In. in 1919 q ndtrtiv due tn higher tin and other mineral prices. Ai operating loss of about $5 million 2A. The -ontinned hich -ost/n nr-em+Ai czf+iint.inn has verely aggravated COMIBOLts cash problem. Although it was known in 1961 that the cash position was nreannou and likely + deteriorae asn rn+ of unavoidable current losses, the issue was never really faced. The agree- ment onl- + +htae it was under nneheQtii a+I_urt, hAi +ha TT The problem became acute in the second half of 1962 when COMIBOL was unable to meet 4+ -ra's gt1m fe 4+.h +hoa +h1q-en+ c-wAbae h i a_-Pv' +11 nv,n. tions, AID provided counterpart funds several times on an ad hoc basis. Toge+ha w4+h verTyr ev-pns-4Tre lnanns fon uom e .a-+nt t +hAse cAnt+r- part fund loans permitted uninterrupted operations. In addition to the cnos _P +ha 1mal+av anne M"e4 +1-,nmnn+n,rr --fn+ -s +hi neA nP taeun+a-OP+ funds this method of financing prevented sound financial planning and caused .n vaimph,en e w f cxisise bw denl p n .1m evea of., ,-vexy- n.s,r ACLy ,vt,1.1 co.n4-r4J_ buted to labor unrest, ill will and lack of discipline. 27. During 1963 AID funds, mainly in the form of dollar grants and T )u. of% u m ---a rused ou couver--1-ve cnan needo s o a e COIMO o:;;U_LJ1vCU 1. 4V%J V±, cAV W4 ilV UDL V14OLh Lu 1VZ~0 . J1VIS..VJ V) at $7 million in 1963. It is expected that the US will continue to finance 4.- -- 1 - - - _P /N/.M \ cu ±LuO usuu-xe m1±nto apper to ne~ve uone~ reabonauly wei.i ±u the past few years, partly because of relatively high world market prices and partLy bcause tney have been able to nolu tneir costi down 1i1s is in turn due to the fact that they do not have the "social" responsibilities 2y The problems of private ining are the same as those o private business generally; uncertainty and lack of working capital. Both of these may be partly alleviated snorxy. a rew 1,1ining Code is ready and its pro- mulgation is one of the prerequisites for US and IDB refinancing of the Mining Bank. The reorganization and refinancing of this bank will benef i the several thousand very small minedoperators whose major problem is lack of working capital. The medium mines nave already received some relier from the IDB.line of credit to CBF. - 7 - 30, The general uncertainties connected with business in Bolivia accounts for the fairly small foreign investment in the mining sector. Major foreign investments have been made in the past two years by Japanese firms for the development of'copDer mines. There has also been some in- terest. from the US and Japan. in the development of the Mathilde zinc mine, and some discussion about a zinc smelter and several foreign groups are actively entering into gold minina. It seems fairly certain that sub- stantial amounts of foreign investment would be available for the private mining sector - given appropriate government nolicies. reasonable economic and political stability and judicial impartiality - since Bolivia is one of the few unexplored. Dotentially rich- mining areas in the world. h* Prosnects 31. If the Triangular Operation for COMIBOL were successfiul the shortrun prospect for the mining sector, on the production side, appears reasonably gnod. Outnut of tin mi2ht increase from ahout 22-000 tnns in 1963 to 25,000 tons in 1964, 29,000 in 1965 and 32,000 - 35,000 in 1966. Over the Inger neriod the growth of the industry demnn on the n of the prospecting work now carried out by COMIBOL and by the UN Special ,A)nd on anrnnriate nolicies to Pttrnt fonrian and dmesti nrivate capital and on a growing world market (see paragraph 70). All reports in- einat. t.hatf the1minral wrInIth isq nr.qn+or nfa",ne development in the future. E. Petroleum 32. The production of crude oil by the YPFB and the Bolivian Oil Company contined too decline +hronh 1962 anA +h o+p+ P +ah n^lvan Oil Company fell further in 1963. The US made about $12.7 million available but there were delays in deliveries Pnd installation so that YPFB output of sizeable deposits of gas and oil in the Caranda field developed by the jdoJO.vian~ uuj.L '-d.L VJulayc.L.Yo 6d4L_. UI .L _ L Ullt-,Ot %X_UDO LIj .LD D u. L-.L. unknown, there are indications that they may be large enough to justify a ga, .~ u., LJ.LM4.L_Le 'L.~ LPWLl LOU U:;U - L-. usU ju-u w-ul l existing line from Camiri to Arica is now being built. In this connection uere have alou een some prelminuary studies of the d Urioution aud uUliL- zation of gas in Bolivia andits industrial possibilities. As of this moment, there appear to be reasonabLe prouspects for a duoscanl increase in the production of crude oil and natural gas in the future. 34. The Bolivian Gulf Oil Company is presently producing crude oil wuen Ls sold to Iril at a pr2ce of $l.pool. for refining in Santa ru . The price charged is reported to be substantially below the YPFB cost of production. In view of this situation and te risKs inherent in o1 ex- ploration, YPFB could usefully concentrate its scarce financial resources - 8 - on developing its refining and distribution facilities and supplement its oi.m crude supply with purchases from the private company rather than en- qaging in extensive exploration activities. F. Electric Power 35. The ower shortaee in Bolivia has Praduallv become more severe and rationing is now the rule in La Paz during the dry season. The generally depressed conditions of industry have prevented the irre0ular and insuf- ficient supply of power from becoming a factor limiting the growth of in- dustrial outnut. It could however, bccomA a mariniin h.t,a1P qhonuld there be a more vigorous revival of industrizl activity. There is also some fear that the rehabilitation proeram for CMT74)T. my e jonnardied by the shortage of power in Oruro* 36. Investment in La Paz and Oruro has been prevented for some years hv th i r+.n.tcn h Caain%mm fq 7ai rnn Pran- nann 90 and the Go-ernient over power rates, arid with CO'MIBOL over unpaid bills amoUknt- " -1^ 9 E mil yt r +Ira midee ^ 1040 T-. n--1-.hn TO0 +1 Government and the power company reached an agreement about the over-all to consider financing the Chururaqui project in La Paz, planned by the Bo- .L.LVJ.yL1n rUweL JumpdIn yJ U, anu L-ne ourni prUJeCU i, ouUvvU U11U V J onA Government. These projects, 11 MJr and 27 IN respectively, will meet the re- ijiometsin t Uoa n win the pro eu areas foren neGtve"en yr proceeded to organize the power sector. A public power company has been 3sab heU V o erve Ue CougIUy outize L rPa, and wil0 be in charge 01 -the Covani project as well as smaller projects now in the planning stage. 1he Government us a_Ls Set up the opseJo iacinnal de Electricidad to ad- vise it on overall power policy and the Direccion Nacional de Electricidad to set and revise C4Ce Le po~er- p -aueo all power enterprises, private or public. The basis for future rates has been laid in the agreement be- tween OPC and the dovernment and wil' be set so as to allow a rate of re- turn of 9% on the rate base of the respective power companies, G. Transportation 38. Expansion of transport continues to be limited to road, and air transportation has continned. The stagnation of shipments of minerais have reduced the use of the railroads. 39. Further rapid growth in road transport can be expected as the economy develops, new areas are settled and the various parts of the country are integrated through new road construction. Eight new road projects are being studied by TA15 financed by a grant of $3 million from AID under the 1$80 million agreement" (see paragraph 6. These projects, the first three of which have been submitted for financing, are designed to open new areas in Santa Cruz, Chapare and Alto Beni, .to improve roads in Santa Cruz and - 9 - from Cnchabamba to La Paz and to link"the maior navigable rivers, the Beni and the Ichilo, to the existing ommunications network. In addition, construction is- and will be- carried-out h the Army. with aistancn from AID, in the most inaccessible pa::ts of the country. Finally, surveys nnH tip.qi av hnvA~ fin~iglio: fn-r tho tnn_c!rviin n~f n no-~ -_n LanrT Paz to El Alto airport. This road forms part of a larger project to im- prove the airport and i+ -Pne41+Jc- seriously after 1959 when the British owners relinquished control of the transport the owners were persuaded in the spring of 1962 to administer the US. Under their leadership there now appears to have been an improve- nul~L in h idi nii bratLJLion a.LUL c L J_.111..LCtA JJVZj_L.LJ1 UJ. L ± .L4i t A, ±111t1 kULI- tract has now been renewed for a further two-year period. 41. In the spring of 1962 SOFRERAIL conducted a study, financed by RZn, 0 hne entire western system* Tney suggested a number of steps to improve and streamline the management of the railroads; pooling of rolling stock, centralization of work shops, centralized accounting, etc. The in- vestments suggested for the next few years were relatively minor, and sub- stantial investment would not be called for until a decision about the dieselization of the railroads has been taken. Further investment in the partly finished lines La Paz-Beni and Cochabamba-Santa Cruz should be stopped and service on these lines discontinued. Although the Government has accepted the recommendations of the mission in principle, it has taken no steps to implement them. Instead the Government has proceeded with a separate management contract for the Antofagasta-Bolivia railroad, (See paragraph 40 above.) II. FINANCIAL SITUATION A, Money and Credit 420 The reduction in the rate of monetary expansion achieved in 1957 has been maintained through 1962 and 1963. However, the expansion was quite rapid during the second half of 1962 and 1963 when the credit needs of the Central Government were substantial. The use of previously accumu- lated counterpart funds to finance the cash needs of COMIBOL added signi- ficantly to the expansion of credit'to the public sector by the Central Bank in 1962. In 1960-1962, credit tp the private sector also exDanded somewhat faster than formerly as counterpart funds were used for supervised industrial and agricultural credit., 43. Within the public sector it appears that the Central Government was successful in reducing its cred#t needs particularly in 1961. COIaBOL, struggling with an almost desperate:shortage of cash to keen onerations 10 going, was the main user of Central B.knk credit in 1961 and of US counter- part fund balances in 1962. Other rualic entities used only a limited amount of credit., 44. In 1960/61 a decision was made within AID to utilize the current and accumulated counterpart funds for local currency loans rather than to sterilize them. Vithdrawals from these funds increased by 80% and the balances declined by 40% during the fiscal year 1961/62, as compared to 1960/61, and only about 27% of the balances at the end of the year were still uncommitted. All current collections of counterpart funds will be used in the future and accumulated balances will be committed for financing local currency requirements of deve.-opment projects, supervised credit, cash loans to ONIBOL and other cases where foreign aid in local currency is needed, 65. The drawdown of counterpart fund balances, principally to finance the cash needs of COMIBOL. was the main expansionary monetary factor during the last three-quarters of 1962. These reductions were additive to the net credits outstandina of the Monetary Department of the Central Bank in calculating the ceiling embodied in the IF stand.-by aereement. Because of the drawdowns to cover the cash deficit of COMIBOL the ceiling was almost breached late in 1962, This process of actual dr,nTdo,wn was. however virtually comnleted in 1962, The rate of reduction was much reduced in 1963, and no net drawdown is expected in 196ho 46. The credit demands of the public sector, financed by Central Bnnk credit ndA rlrawdmmn f hArtatLn alancesr- havem ':sverely limited the room for expansion of credit to the private sector. The lack of confidence in t'he poitical and aec-nm4tc fut.i"aretf t.he cointry nn thp part of the private sector has also tended to increase the demand for within the private sector itself. The use of some counterpart funds for .L1d~ ..AiI .'J J A..3 U LA J.SL V _ 0 0 - somewhat in recent years. Further easing for particular sectors may take are reorganized and refinanced. The creation of the private Industrial Banm i 19 u was als ALi0eu upon by the olivian privae sector as a means of obtaining working capital, although its main function would be to provide capital for fixed investment. B. Public Finances 47. The over-all financial performance of the public sector does not appear to have ivproved materially in the last few years. The over- all deficit has amounted to 107-15 or total public sector expenditures or probably substantially more than public sector investments. To finance the deficit US cash grants have been relied upon. The increased deficits in 1962 and 1963 seem to be financed also by external borrowing on soft terms to a greater extent than in previous years. The greater utilization of US assistance in the form of grants and loans accorits for the smaller increase in Central Bank credit u ilized in 1961-1963 as compared to pre- vious years. s 11 - 40 TLe I1cal performiceL1.~ o.L ULe nIu . 4-1-.n --n sonably good and is improving. The cash deficit declined steadily from 19y9 to 1963 as revenues increased scanewhat ate than taul u The amount of domestic borrov ing neeced declined sharply in 1961, when US budget support and externaL borrowilg covered e ash eficUt, ut it has tended to increase since as US budget support has declined, 49. A further general'mprovement in Centrai uovernment finances was projected for 1964, but1lylb. being an election year, 1T 15 to be ex- pected that, despite satisfactory performance on the revenue side, the cash deficit will increase. Greater administrative efficiency and im- provement in the customs services should permit a continued increase in tax receipts. The greater role played by the Budget Bureau in the execu- tion of the budget, and improvements in budgeting procedure should permit better expenditure control. Further improvement is possible if the Minis- try of Finance were given wider powers in the preparation and execution of the budgets of the autonomous agencies. The elimination of the deficits of these agencies would relieve the Central Government of a substantial burden and would make it possible to 1:eep the budget deficit to manageable proportions, over the next few years, even though US budget support may be gradually eliminated and the execution of the Ten-Year Development Plan may add to the expenditures of the Government. 5O. The cash position of COMIBOL has deteriorated steadily because of continuous operating losses. The cash deficit reached some Bs. 115 million in 1962 not including investment expenditures covered by foreign loans under the Triangular Operation'. These cash requirements were met by US local currency loans from counterpart fund balances. Some reduction in the cash deficit to Bs. 78 million, occurred in 1963, due mainly to higher tin nricns and some increase in nroduction. Provided the rehabili- tation effort is successful in increasing output, and cutting costs and this innrovement is not nullified by strikes or large wage increases a fur- ther improvement should be possible in 1964. Under such circumstances, t is qui. possible th+.t the ecash efdniits of MOMTROL would be eliminated by 1965 or 1966. 51. Increases in costs, particularly wages, without adjustment of prices have left+ YEMFM wih-ea i^oe -adt rrai ngcs position despite curtailed investment. New prices for petroleum products pU into eff"ecto in1 OCtob10er 19/61 a"re fre1-1Mnertiv ~ad shul. tgether with the disbursement of US loans for investment and exploration, have .Leu UU cilE 4U1iPi-UVUU LjL J_±.. LL1 .L7%j'C(IIALL .L/%OJ* pro ~Lucreasing operating costs, particularly WC%61oualeu 0 powerful railroad unions, have compounded the difficulties of the State a.Lroads cauaeu Uy aUmin%.XibUraJUL'Lvc LuiW.LI..Lt-:1Uy MILa L --'-u volume. However, the Antofagasta-Bdlivia railroad is gradually improving November 1962, improved the chances of a successful recovery of this rail- road, The other railroads shlou.ld also impro1Vethei pefomacewih"h increase in mineral transport that should take place as COMIBOL is re- habilitated. Moreover, savings in costs could be effecUu if labor discipline could be maintained and th' SOFREFAIL recommendations imple- mented. C. Wages and Prices 53. Some wage adjustments have taken place in the past three years, particularly in the public sector. There was, however, evidence of a tougher attitude on the part of the Government as it has refused in some cases to give in to the demands of the unions. A strike on the Antofagasta- Bolivia railroad in November-December 1962 was finally settled on the Governmentts terms and without payment of wages for the strike period, and it maintained the sane position in the strikes in COMIBOL in the fall of 1963. Wage and salary increases are, nevertheless, likely to continue to be dangerously large in relation to the demands of economic stability. $b. Greater regularity in the payment of wages and salaries by the public sector, and particularly by 01IBOL, has contributed to greater labor peace. It has not led to improvement in labor discipline or to a reduction in union interference in management decisions, which remain the main obstacles to the execution of the Triangular Operation and the implementation of the SOFRERAIL recommendations, These difficulties are compounded in the private sector by the one-sided application of the Labor Code in favor of employees and unions and the required Dayment of wages for time devoted to union activities. 55. Consumer prices, as measured by the cost of living index for La Paz rose about 8 in 1961 and IX in 1962- while thnv dechined by about 1.5% in 1963. The increase in agricultural output and fairly large imports of TTS t-pj_e-t~1tua2 rnrnrv i iMP.- lied ' . _ eierPA in fnnr prices. in 1963. A growing shortage of housing has led to higher rents. The prices or sMei r%11-0i F, '11+A -1.fr se r ? , aa (neyg. rail-rra nir r%-P na.-niiivn ducts, have been raised despite theirpolitical implications. A rate in- crease f~or electric -14w aplcable to i,utal-;- T ' Dnfa- granted early in 1963, to enable the private company to start preliminary WXA l'~l WUL~,4L 4 l .k J. .LanV, III. EXTERNAL FINANCIAL S ITUTATION A ~~ V - 4- --A -r- --- .M , L.&PVI UO Ui 1JP1 v6. The volume o mineraL exporis has fluctuated substantially from year to year since 1958 while remaining, generally speaking, at a low Level. Developments in 1962-6 were,! on the, other hand, dominated by the increase in the nrice of tin and certain other mineral prices, The tin price reached its hignest level since ly;2 in the I-ourta quarter of lvo3. Total export volume of tin was abou 22,000 tons or 4% above the level of 1962. 57. Imports have increased st6adily in the last three years rising >Om lill3On In Ly, Q LO 'T(U RL."LL011 _in LUp QU, qUy V.L1_±L1 11 L7Vr- L" about $100 million in 1963. This increase has been due largely to in- creased imports of manufactured gooas, particularly machinery financed by foreign loans, and by shipments of, wheat and wheat flour under PL B80. The sharp increase in YOZ was also due to increased monetary demana for consumer goods stemming from the drawdown of counterpart fund balances. B. Balance of Payments 58. The deficits on current account have continued to be very large,. amounting to 57% of foreign exchange earnings in 1960, 59% in 1961, 72 in 1962, and 77% in 1963. Private investment has gradually declined, from about $21 million in 1959 to about 1p"10 million in 1962. and $6 million in 1963. US aid, in the form of grants and loans, is still the major element in financing of the deficit, and has in fact increased in importance in 1961, 1962 and 1963. 59. The amount of dollar aid has gradually expanded from the low level reached in 1960 and the amount disbursed in the fiscal year 1961/62, $23 million, was almost as large as in 1957/58. Although disbursements of grants rose in 1961/62, PL 430 and DIP loans accounted for most of the increase in total US aid. The sharp rise in undisbursed obligations in the past two fiscal years should result in further increases in disburse- ments. but a longer laz should be exnected as development loans tied to individual projects become more important relative to cash grants for budget snnort. This rise in loan dishursments was already evident in the calendar year 1962, and these disbursements are expected to continue on a relatively high level in 196 0. rfltl1 nnr Pn~r.1a Trchr-lna Pq-rao- 60 - ------- an Uold and -f- eign exhag . e-. as fu c tuated- around an inadequate level in recent years. The swings have not been tively speaking. 61. Reserves were reduced by %b.2 million in 1962, equivalent to rLoughly 0/ofreserves at Wt;e beginn11ing1t ofL U te ye;Ar. Th,ri lOs Was; basically due to the expansionary effect of the drawdown of counterpart fund balances. In addition, there probably was some capital flignT cau6eu by the fear of inflationary repercussions of prospective vage adjustments. n 1963, there was an increase. of o6.1 million in the gold aiia foreign exchange reserves due primarily to increased export earnings and a large increase in economic aid and long-term capital infows. 62 Even though Bolivia has a standby agreement with the IMe, under which $7.5 million were available between April 30 and September 1, 1964, the precarious international reserve position does not permit the use of expansionary monetary and credit policies, and an economic upswing not accompanied by an even more vigorous revival of the export sector will jeopardize.these reserves. - 14 - IV. PLANNING. INVESTMENT AND FOREIGN AID 63. A Ten-Year Plan for Social and Economic Development has be-.:r. prenared by the Bolivian Planning Offire and adonted h- the Goverr*.- in 1962. It envisages a growth rate of over 8% per year. Gross invest- ment of A1.291 million and foreian mist.nnof nnihit AT7 milIon in- cluding external resources to service the debt, are called for. Bolivia uould 'e virtnlly indpendent of 1r=egn snis+ane br +he end of the period, according to the Plan. 64. An ad hoc committee from the "Committee of Nine" studied the ,L.L- JA ~- e u I LL%AV% sA U2 V11 .L . LCL % 1%CU J.L%J %U ~ I IIA.16±. i -LU .LLI- sufficiently operational to be fully appraised and suggested that the mittee recommended that financing for such a program, and for feasibility tuUdies to Wvelop suItle proecvts be earmarked immeiLateLy. Agree- ment was subsequently reached between Bolivia, the US and IDB for financing of about qu0 mlulion, of wrich o million was earmarked for studies and the rest for specific projects. The IDB portion was made up of projects in varivus stages of consideration. TABLE 1 The odu - Ivallion Agreement (in millions of US dollars) IDB Own Resources 11.4 Social Progress Trust Fund 10.0 21.4 AID Feasibility Studies 6.0 Agricultural Bank 3.5 Mining Bank 5.5 Industrial Bank 1.4 Other Future Projects 42.2 58.6 Total 80.0 65. The results of the committeets suggestions, which were designed to speed up the process of lending and disbursing to Bolivia. have been slow. The two-year investment program has been finished and has been sub. mitted to the ad hoc committee of the "Committee of Nine" for comments. It does nlot contain any new projects. Out of the IDB portion of the '80 imillion three projects amounting to about 1lk.5 million havn been approved while the two other projects are still being considered. The "h2 million earmarked by AID for feasible nroiects remains practically untouched. The first road projects amounting to $7 million have now been approved .Ad two moe applications are eXpected soon. The financing of the mining bank is held up by slowness in improving its organization. during the first year - for a contract with TAMS to study certain road prujeco. A step iu tne-uirection fU speeuing up tule search for Inew projects was the conclusion of a contract with the Deutsche Projekt Union )ru; fur suiues to be financed jointly by aIv, !vB, the Federal Republic of Germany and the Bolivian Government. 66. AID is disbursing for some projects in 1963-6. that were sub- mitted before the signing of the 80 million agreement and have since been approved. Improvement of the airport, estimated at $3.4 million, the new La Paz - El Alto road and the relocation of the La Paz custom- house, projects estimated at a total of $6.1 million are being carried out. in addition, some disbursements will be made from the $1.75 million Esperanza sugar mill loan and from credits previously granted YPFB. 67. The IDB meanwhile is disbursing from the $10 million line of credit, of which only a small amount is still uncommitted. In addition, of course, disbursements will be made under the Triangular Operation for COM1IBOL. 68. This inventory of prospective project financing presently in signt indicates that there is an insufficient number of suitable projects to permit disbursements of US and IDB aid, on a project basis, at a rate anywhere near recent levels of foreign assistance. In order to maintain these levels cash grants or other forms of balance of payments support would have to be extended to Bolivia. The TAYB studies have yielded some projects but major disbursements are unlikely before 1965. If new sectors and projects ripe for feasibility studies are not discovered quickly, and such studies undertaken, there is likely to be a delay before a pipeline of feasibility studies and submitted projects can be built up to permit a shift to a project basis for external assistance. V. PROSPECTS FOR FOREIGN EXCHANGE EARNIAGS - CREDITWORTHINESS 69. An acceleration of economic growth in Bolivia under conditions of relative internal stability is greatly dependent on expanding foreign exchange earnings even if a substantial nart of new investment. is financed from abroad. While the low level of production is now holding export earnings from tin down below their notential level marketing roblems may prove to be the limiting factor in the future. 70. A recovery of Bolivian tin outpub., if paralleled by a similar development in Indonesia, could make production controls necessary in the main exporting countries by 1966 On the optimistic assumption that Bolivia can recover some of the quota lost through under-export in pre- vious years, its quota might reach 30,000 tons by 1966, or considerably below the production of 32,000 - 35,000 tons implied by the successful completion of the Triangular Operation. After 1966 only the slow (2%/year) growth in world demand can be counted on to expand the export market for tin. 71. With production controls in force it should, however, b6 pos- sible to maintain the price of tin at its present level of 11,COO/ton (about $1.24/1b.). Given the successful rehabilitation of COMIBOL, gross value of tin exports, ex refinery, including transportation costs and the cost of smelting the ore abroad, which together amount to roughly 25% of the gross value of mineral exports, might reach %72.5 million in 1965. This represents an increase of 44,' over the 1961 level. Increases after 1965 are expected to be only marginal. 72. The gross value of other mineral exports are unlikely to grow by more than about 16% (or 5% per year) from 1962 to 1966 to a level of about $22 million. This projection is partly dependent on the successful rehabilitation of CONIBOL and nartly on the continued expansion of private mining. It also assumes moderate price increases for lead, zinc and tunwst.n and stable prices for conner and silver. For the neriod after 1965 it cannot be assumed that prices will continue to rise and further growth in e.nort earnings will dennd on the nossibilities of exnanding output in Bolivia and on growth in world demand for the minerals exported 'hv Enl ivi A 731 Subst+na na nmmunts- of f'orei ogn exchnnan fromn t.he ePort. of gas. or crude oil exports cannot be counted on until after 1965 even if enough gas -: isC found-M to,- Alvni -Nr+the gas -n.~ 4- qn Pano I % T+ is! nlm nr%Qcz i1 that after 1965 exports of agriculture will become important although this depends on muc greate sucs^ntedeeomn 'f +Wn T^.qlvnAc habilitation of CONIBOL, seem to point to a level of export earnings in 7 %J~J. CUJV V A tW[,7 J~L %W,4)E4 J1LL_."%ALA LLVIL I.Ltj .LL, ULL.L."vn~ X. n, 04 er minerals and $8 million from other exports) or somewhat above the level Of -n-7 1-± 4.JIUL n'?e _AJUVt 4-1--.. -le%4n -7. olivia s external public deut amounted to anWesCtmated .7o million as of December 31, 1963. Accumulated arrears of principal and IntereSv amouVed ou aUout Z: l7V mi.llon at Une en Qo 1962, mot of' it on Eximbank loans. Payments of intetest on the bonded debt, which had been in default since 16u, were resumed in 1962 following an agreement with the Foreign Bondholders Protective Council. After several years of continuous payments to te former owners of tne expropriated mines, these payments have now been discontinued while a definite determination of the amounts involved is being negotiated. - 17 - 76A Aes+ cnYzr^ mvn-imam+c ire c1keduled t 1ni1+ $L4114nn- in 1964 and rising to about $16 millicA in 1965 and $18 million in 1966, not Awindin o e4l a 4 ,Aam,4 94 n+4 ar n,r,v.+o +n 9n.wav,.n4mnmvae payments of accumulated arrears. These debt service payments would repre- S n. awuv 1-5 u/ w-Ljywxt ean.gs as Va.vaJua UV%A CLVvw, AA .L7Un4 CULU and about 220 in 1966. 77. In view of the relatively high level of debt service, the limited prospecs for uv u o int 4V vri4 gn un.alliu Valulugo alnu 1Ur- substantially narrowing the gap betweet savings and Bolivia's investment reuiremenU, exUerneL Linancing Lor tie bulk of Boivia's invebmrient requirements should be on special terms. In these circumstances Bolivia should make every effort to increase public savings and to utilize ex- ternal resources for projects which will most effectively strengthen DOiVia' 001 ecoo poiition. TT O1? PABLE,S .L 6J LU1Ua.W .Y VA .A UV.-jLL..L U ;LLL. 10J 0 V 2, Service on External Public Debt, 1964-1978 - r - U. - IJ 4. Eatimated uross Domestic Product, by urigin, .y>1-1yu1 5. Estimated Changes in Gross Domestic Product by Origin, 1957-1962 0. Estimated Changes in Gross Domestic Product by Origan, 19>r-1YU4 7. Measures of Recent Development of Agricultural Production, l959-1962 8. Indicators of industrial Activity 1950, 1955-1962 9. Production of Minerals.by Comibol and Private Mines, 1955-1962 10. Exports of Minerals from Comibol and from Private Panes, ly 2-1yo2 11. Petroleum Production, 1950-1962 12. Prices of Petroleum Products, June 1961 and November 1962 Monetary 13. Monetary Situation: Changes in Foreign Reserves and Money Supply, 1959-1963 14. Monetary Situation: Changes in Domestic Credit Outstanding, by Destination, 1959-1963 15. Monetary Situation: Changes in Domestic Credit Outstanding, by Origin, 1959-1963 16. Counterpart Fund Balances, 1958-1963 17. Money Supply and Privately Owned Deposits of Bolivians in United States Banks, 1953-1963 18. Percentage Changes in Money Supply, Cost of Living, and Value of the Dollar, 1956-1963 Fiscal 19. Operations of the Public Sector, 1959-1961 20. Operations of the Public Sector. 1961-1963 21. Operations of the Central Government, 1959-1963 22. COMIBOL - Profit and Loss. 1957-1962 23. Payments to Former Owners of Nationalized Mines, 1953-1962 2h. U.S. Ar.ist.qnr to Bolivia Pinal Yrns 1947/q1 - 1961/6 25. Development of Local Currency Balances, Fiscal Years 1958/59 - 1961/62 Foreign Trade and Payments 26. Balance of Payments, 1957-1963 27- rns Value of EprtsCnn" laqfied by Commodiy+ 1o)OR and 1Q9a2-19A 28. Volume and Price Indices of Exports, 1953-1963 90 'P"4r-nZ ^-P Mn4-^ + PmmnA4+4-4 -n4- m M-n+e0 - 10)JA loco-IOAS 30. Commodity Composition of Recorded Imports (cif), 1957-1962 32. Gold and Foreign Exchange Reserves of the Banking System at the end of '.-~~.'.-,,0 t S-J "J 06 .JL7 T'ABLE 1: BOLITIA - External Public Debt Outstanding Including Undisbursed as of Decenoer 31, 19o3 with Major Reported Additions January 1 - March18, 19641 Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) Debt outstanding Major reported December 31, 1963 additions Item Net of Including January 1 - undisbursed undisbursed March 18, 1964 TOTAL EXTERNAL PUBLIC DEBT 180,566 217,614 2,930 Publicly-issued bonds 261,96 61,906 Privately-glaced debt 27,607 32,087 50 IDB loans 7s125 11,730 - U.S. Government loans 33,938 60,552 - Export-Import bank 41,214 21,30 - AID 12,704 39,250 - Loans from other Western Govts. 49,962 51,311 2,880 Argentina 47,061 40o,3o - Brazil 182 182 West Germany 13993 2$001 2,0o United Kingdom 706 7142 Loan from Czechoslovakia 28 28 1/ Excludes debt arising from the nationalization of the mines, which took place in 1953. 2/ This bond issue is the result of a 1958 settlement on 4 defaulted issues: 4 9 -nn -annn AT 1017-1Ohn $ 29,000,000 8% 1922-1947 i a nn Mnn 7'/ 1o7-1 CA $ 23,000,000 7% 1928-1969 In 1958, the principal amount of old bonds outstanding was $56,278,000. Under the settlement, bonds were stamped to indicate a new principal amount equal to 110/ of the original amount, the additional 10% being in full payment of un- paid interest. Starting the second half of 1957, interest was to be paid on the stamped ionds upon surrender of coupons at a rate of 1% per annum through 1959; 1-1/2: per annum in 1960 and 1961; 2% per annum the first half of 1962; and 3 per annum thereafter. A cumulative sinking fund of 1/2% per annum for the years 1962 to 1966 was to be provided. The sinking fund thereafter was to be 1% per annum based on the amount of $56,278,000. Bolivia defaulted on certain interest payments in 1960, and on all interest payments in 1961. In 1962 and 1963.partial payments were made, and on May 25, 1964 she announced that two coupons of each bond would be paid in 1964 and the extension of the period for exchange of non-assented bonds to June 30, 1969. Source: IBRD - Economic Staff TABLE 2: BOLIVIA - Estima-ted.Contractual Service Payments on External Public Debt Outstanding Including Undisbursed as of· Deember 317,I1963wiTMajor Reported Additions January 1 - March 1ö, 1961 Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) Debt out- standing Payments during year Public- Pri- U.S. Government Other Year plus un- AMorti- In- Tota1 ly- vately- IDB Total Export- AID Govern- disbursed zation terest issued placed Loans ITport ments January 1 Bonds Debt Bank 1964 217,614 9,979 3,969 13,948 844 7,777 .180 3,845 3,221 62h 1,282 1965 210,565 11,h65 h,373 15,838 1,688 8,210 816 3,45 2,560 885 1,669 1966 198,233 13,906 .4,hh2 18,3.48 1,970' 7,390 ,130 4,194 2,491 1,703 3,664 1967 183,379 9,375 h,299 13,674 1,970 2,886 1,1317- 4,093- 2,422 1,671 3,588 1968 172,942 9,171 3,954 13,125 1,970 2,343 1,099 3,998 2,353 l,645 3,715 1969 162,580 10,244 3,825 14,069 1,970 2,230 2,276 3,966 2,283 1,683 3,627 1970 151,004 12,081 3,26 15,507 2,251 l,684 2,193 3,867 2,215 1,652 5,512 1971 136,586 9,693 2,961 12,654 2,251 872 2,117 3,851 2,143 1,708 3>563 1972 124,277 7,664 2,550 10,21h 2,251 h99 1,392 2,876 2,075 801 3,196 1973 113,682 7,260 2,213 9,473 2,251 477 1,181 2,549 2,005 154 3,015 1974 103,140 6,534 1,885 8,19 2,251 454 3,189 1,933 1,:256 2,525 1975 92,931 4,36,8 1,592 5,960 2,251 1,24 1,2h 2,h65 1976 8h,44? 5,333 1,355 6,688 2,251 1,238 1,238 3,199 1977 74,503 5,517 1,077 6,594 2,251 1,228 1,228 3,115 1978 47,425 3,796 45:5 4.,251 1,220 1,220 3,031 Source: IBRD Economic Staff. ARTR I Etimit.d A,ftixuilated Arrears on Service Paymjnts on External Public Dbt nS o ,f Sbptember 30. 1962 (in thousainds of US dollar equivalents) 1. Long-term Debt 17,174 Bonded debt 1,546 Capital - Interest 1,148 Export-Import Bank loans 13,253 Capital 9,086 Interest 4,167 Capital 2,201 Interest 172 Co solidateD Part o ra414n DebtI1 2. Aedin-termta Debt 363 Arpic Agreement ;arkus Agreement YPFB Debts41 Other 170 3. Total Arrears 17,527 ciource: Cnt.ral Annk of Bolivia 1/ Lstimate. TABLE 4: Estimated Gross Domestic Product,by Orign, 1950-1961 (in millions of 1958 US dollars) 1950 1952 1953 195 1955 1956 1957 1958 19.59 1960 1961 1962 Agriculture 118.1 113,1 105.1 101.7 107.6 104.2 110.7 121.5 128.6 121.9 133.9 136.4 Mining 52.1 58.3 59.1 48.3 51.0 46.1 47,4 32.7 31.2 33.8 37.7 35.5 Petroleum 2,5 2.1 2.5 6.9 11.1 13.1 14.7 14.2 13.3 14.6 13.2 14.2 EManufacturing 48.0 49.0 49.0 54.9 55.7 51.h 36.0 39.5 41.5 44.6 145.3 48.2 Constructiorf/ 1-8 3.6 2,5 2.5 3.3 2.6 3.1 4.1 4.3 5.4 1.9 Commerce and Finance 40,5 48.5 41.7 42.5 47.2 45.2 47.0 45.3 46.4 47.3 L3.0 45.6 Government 41.0 55.0 24.9 28.6 30.5 26.0 20.7 27.1 28.0 31.9 32.5 314.5 Other Services 2/ 32,,2 314.3 34.6 34.4 35.5 35.9 36.2 36.8 37.7 38.6 43.1 44.3 Transportation .19.7 23,9 23.6 26.4 29.4 19.7 27.1 30.0 • 30.8 31.4 33.14 37.0 Gross Domestic Product 355.9 387.8 313.7 346.2 371.3 354.8 342.9 351.2 361.8 369.5 381.9 397.8 1/ Bases for reporting construction changed in 1961. 7/ Includes electric power. Source: National Planning Corrmission. TABE 5: Estimazea Cnanges in Gr6ss Domestic Product by urigin, 1957-1962 (in millions of 1958 US dollars) 1957 1958 1959 1960 1961 1962 Agriculture 6.5 10.8 7.1 -6.7 10.0 4.5 Mining 1.3 -14.7 -1.5 2.6 3.9 -2.2 Petroleum 1.6 -0,5 -0.9 1.3 -1.4 1.0 Manufacturing -15.4' 3.5 2.0 3.1 0.7 2.9 Construction 0.5 1.0 0.2 1.1 1/ 03 Commerce & Finance 1.2 -1.7 1.1 0.9 -4.3 2.6 Government -5.3i 6.4 0.9 3.9 0.6 2.0 Other Services El 0.3 0.6 0.9 0.9 4.5 1.2 Transportation -2.6 2.9 0.8 0.6 2.0 3.6 Gross Domestic Product -11.9 8.3 10.6 7.7 12.4 15.9 1/ Bases for reporting Construction changed in 1962. 2/ Includes electric power. Source: National Planning Commission. TABLE 6: Estimated Changes in Grcss Domestic Product by Origin, 1957-1962 (Percentages) 1957 1958 1959 1960 1961 1962 Agricul+ure 6e 90 5A c' * A09R Pe+roleum 12 27 "0 2 1 .5.4 Mruf+nf O .7 c 7 L Cn .st u . Z.2. -4.*8 2e6 .e-0 ., 5 .+ P-e. n+ - 7 O00 0 I.1. I A A GovernmentJA -20.'4 30. 3. 13.9 1.9 uOutSerices 0.8 .o7 J2e4 2e 4 2.e e Tliansportain o -8.8 in.7 2eA 1.9 5.7 0JVFJti1 C e 0 Ug.,g ,)gy igy UdLerJOVUFVLU.L I UeU 14( I de * . GeL4 Gross Domestc Prouct -3.4 2.5 3.0 2 4 1/ Bases for reporting Construction changed in 1961. &I I it includes electric power. Source: National Planning Commission. of Agriciltural Production, 1-.56 -72 1 57pu 8-7?7 J1959 J 967v -L162 a. Index of .!stinated Production of In -A gricul tura Produc ts Åa.L t i - k i.. UL dJ UU14L (1959- 100) heat 100 95 94 84 "ice 10 19 n 2 n^ 23^ Crn 100 95 100 90 -r ey 100 95 153 155 Coffee 100 223 223 234 Brazilian nuts 100 1h8 88 i-4 Yuca 100 80 111 95 PotaLoes 100 91 93 05 Bananas 100 90 105 97 Citrus Fruit 100 90 105 i50 Cotton 100 523 271 588 B. Agricultural Production Index (1953-1955 = 100) i14 121 126 G. Output olf efined Su;ar Thousands of tons 4h 87 155 175 245 412 470 Index (1959 = 100) 25 50 89 100 140 235 269 Percent of Doreslic Consumption 10 12 32 28 48 67 n.a. äources: A. Ministry of Agriculture. B. AID/Dolivia. C. vdinistry of Agriculture. 1950, 1955-1962 Use of electric enerir in manufacturing indus- Production of tries in La Paz area Portland Cement 1950 -- 38.1 1955 28.8 37.5 1956 28.9 33.1 1957 23.8 23.7 1958 20.9 28.9 1959 22.6 29.5 1960 23.5 38.5 1961 23.4 41.3 1962 - Jan-Jun 11.8 n.a. - Jan-Oct 20.4 n.a. Source: Bolivian Power Company and US/AID Bolivia. 1/ Provisional estimate. TA'NI.T' 9. Production of Ainerals by Comibol and Private iines, 1955-1962 *1/ (iri thousands of fi-e metric tons of metallic content) Gold (fne Tin Tungsten Lead cpper Zine Antimony Silver Kilograms) 1955 Cojnibol 23.5 1.6 9.6 3.3 17.6 - 0.2 n.a. I'rivate mines 4.6 1.h 11.3 0.3 1.3 5.2 - 2,300 -- Total 28.1 3.0 20.9 3.6 18.9 5.2 0.2 2,300 1956 Comiboi 23.0 1.6 10.7 l.0 21.2 - 0.2 n.a. Private mines 4b 1.4 10.4 0.6 - 4.0 - 700 Totai 27.4 3.0 21.1 4b.6 21.2 h.0 0.2 700 Co:ibol 21.7 1.2 8.3 3.0 15.0 - 0.1 7 Privat .aies 5 1.1 -I8 . 1,h00 Total 27.5 2.3 26.6 3.8 15,1 3.0 0.3 1,,07 1958 n,ro 1'7 5 n.6 '7 2. 8.7 - 0.2l Private m 3s 3,8 2 6 15.0 0.7 0 _ 6.6 - 600 Total 21,3 12 22.6 2,.9 9.1 6.6 0.2 60 Cmibol 15c8 0.4 6.3 1.5 2.2 - 0.1 1 PriLvatemie 5,2LE 0 8 lLa.O V ,6J -025 5. , 21.0 1,2 21.1, 2.1 2.7 5.2 0.1 1,002 196,3 Cor- Iabol 15,2 0.5 7.3 1.5 3.4 - 0.1 3 Private mines 5.5 0.8 14.1 0.9 0.8 5.3 -* 1,l1 1961 20.7 1.3 21.4 2.4 h.2 5-,3 0,1 1,14 Cobol 148 0.h 6.8 1.h Li. 2 I 4 Private mines 6,8 1.3- 12.9 0.6 0.6 6-7 21.1 1.7 19.7 2.0 h.8 6,7 0,1 1,451 1962 ('Jan-Jun) Comio_. 7.3 0.2 3.0, 0.8 1.8 - 0.1 3 Private mines h.0 0.6 5.8 0.5 0,2 3,1 0_1 alk 11.3 0.8 8.8 1.3 2.0 3..1 0.2 '17 ource: ining Courporatn JLLVoLfD va (Cjmiuolj, MIriing 3ank and Mifnijstry of -ines and Petroleun. 1/ Productýion figuren for the privat mines are not directlyavailable. Figures shoiwn are exports, Thich are roughly equivalent to production in most cases. 2/ Includes 800 tnn. sold to Comibo' byagmediumine and nt included in that. minels export figures. TABLE l0: Exports of Minerals from Comibol and frol P-rivate Mines,19521962 (as 1 of total dollar value) Total Percentage Year exports medium smal USp Mill. Conibol sized mines mines Unspecifieß 1952 136.o 68.1 1å.l 17.3 o.5 1953 109.5 76.3 9.4 13.8 o.5 1954 98.7 71.6 8.5 11.8 1955 97.8 7).1 9.6 I5. 1.0 1956 1000 7 ?8 152 6 1957 . 7L. 9.1 16.2 3 1998 55.7 72.0 7.9 16.7 69.0 68.2 9.o 18.9 3.9 S96oure0 . 6ä? 3. of1 H19. a 1962 (Jan-Juni) 36.2 59.1 13.3 18.8 8.8 Source: iMinistry of H'ines and Petroleumi. TABL 11: Pe troleum Produton, 1950-1962 (in thousands of cubic meters) Production Consumbption.LU Year Crude Losses and <PFB Private Refi.r d Domestic Exports ch%Is6 stocks 190 98 - 98 78 - n.a. 83 - 68 79 - n.a. 195l8 - 71 95 ~ - n.a. 1953 96 - 72 106 - n.a. 1954 269 - 249 203 - n.a. 1955 428 - 338 2h3 99 86 1956 508 - 446 297 122 79 1957 568 - 406 274 197 87 1953 547 - 375 271 219 57 1959 504 - 351 265 152 87 1960 495 74 359 304 180 85 1961 430 45 357 303 113 39 l .62 (Jan- Jun) 196 21 212 161 38 18 Source: National Petroleum Corporation and Hinistry of Mines and Petroleum. n.a. = not available. - = icdicate less than 0.5 cubic meters. TABLE 12! Prices of Petroleum Products, June 1961 and November 1962 - - - June 1961 - - - - - - - Nov. 1962 - - - Ps./liter US cts/liter ,s /liter US cts/Iiter Gasoline, Regular 0.42 3.5 0.70 5.9 Gasoline, Extra 0.58 4.9 0.90 7.6 Gasoline, Super-Extra 1.00 8.3 1.10 9.3 Kerosene 0,25 2.1 0.25 2.1 Diesel Oil Q.30 2.5 0.55 4.6 Fuel Oil 0.25 2.1 0.30 2.5 Purchase Price of Crude Oil from Bolivian Gulf Oil Company - $1.65/bbl. Source: National Petroleum Corporation. TABLE 13: Monetary Situation - Changes in Foreign Reserves mnd Money,v Su-pply, 1959-1963 (in millions of nliviAn pesos) Net Foreign Reserves (inc. -) 13.8 30.2 -27.9 51.5 -80.7 Assets (inc. -) -66.2 55.5 4.1 37.9 -94.2 Lib ilitie n0.0 -. i. n 1 3.5 o supp.- 91A3. 7" 6 17o ,iurnc i.. 3L. 6:.1 ,v 44G" 7909 Denand Deposits 10.2 -0.7 14.5 17.1 27.1 Other Liabilities to Private Sector 7.7 2.1 9.7 18.6 12.1 Total 113.h 66.1 56,h 131.6 38.4 Sourcue: e D.ntLrB . an DUofB VJ i u Ir Oa=z 14: yonetary oiuation: unanges in Domestic uredit Outstanding, by Destination, 1959-1963 (in millions of B1ivian pesos) 1959 1960 1961 1962 1963 Public Sector 89.3 9008 22o7 45.4 14. Central Government 81.2 77.7 8.9 27.1 390 State and Municipal Governments 4.9 3.1 1.2 -2,0 -3.5 National Mining Co. (COMIBOL) 24.1 13.9 29.6 13.9 -8.2 National Petroleum Co. (YPFB) -0.3 5.6 -19.4 -3.1 -9.4 State Railroads 5.9 -5.9 - - - Bolivian Development Corp. (CBF) -22.5 -1.4 -1.2 3.0 -2.6 Social Security Funds -0.1 -1.2 1.6 1.8 -0.1 Other Autonomous Agencies -3.9 -1.0 2.0 4.7 -0.3 Counterpart Fund Balances (inc. -) -31.8 -33.1 -34.2 45.7 15.9 Private Sector 16.1 30.0 60.7 33.0 -18 Supervised Credit -3.2 18,3 28.0 n,a. n.a. Other 19.3 11.7 32.7 n.a. n.a. Official Capital and Surplus (inc. -) -8.6 -5.1 -9.4 -5.7 -32.8 Net Unclassified Assets 42.3 -17.2 15.3 13.5 39.2 Interbank Float 5.9 1.0 1,2 -o. 2.9 Total 113.2 66.4 56.3 131.5 38.3 Source: Central Bank of Bolivia and IF. TART.E 1qt Monetary Situation: Changes in Domestic Credit Oatstanding, by Origin, 1959-1963 (in millions of Bolivian pesos) 1959 1960 1961 1962 1963 Central Bank 1Og 62i 3 ) 40A '7 0 107. 9- M~~+rTh+~00 O# RO) 0 1.ri A P(I 7 IR Banking Department 1.4 -20.1 -3.8 26.9 6.3 Commercial Banks 8.0 41 18.0 18,2 12.2 Specialized Banks -1.7 -,6 0.2 6.4 -1.5 Interbank Float 5.9 1,0 1.2 -0. 2.9 Total 113.2 66.3 56.4 131.8 38,4 ,jaarce iI.Z LLdCt Od..1UM U-. IJV.L.LV.LCL OUiIAA JL. TABIE 16: Counterpart Fund Balances, 1958-1963 (end of period in millions of Bolivian pesos) 1958 1959 1960 1961 1962 1963 I. Counterpart Funds Representing: Unspent US Assistance 84,4 119.4 134.1 140.4 91.0 90,8 With Monetary Department 84.4 118.1 111.2 104.2 91.0 90.8 With Banking Departnent -- 1.3 22.9 36.2 - II. US and IADB Funds fur Supervi6ed ,Bank Credit-2-17-3 35-. 63.6 67.-7 -51. With Monetary Department - - 6.0 7.4 4.9 0.3 With Banking Department - 1.3 1.2 10.5 16.4 21<.3 With Banco Agricola 15.0 14.4 18.9 29.7 33.6 17.4 a) US Funds (15.0) (14.4) (18.5) (28.3) (27.8) (7.0) b) IADB Funds ( - ) ( - ) ( - ) (1.4) (5.8) (10.4) With Corercial Banks 5.4 1.6 9.6 16.0 12.7 12.6 Total Counterpart Funds 104.9 136.7 169.7 201..0 158.3 142.4 Changes 31.8 33.0 34.3 -4-5.7 -15.9 Source: Central Bank of Bolivia and IMF. Note: These figures are not directly comparable to those in Table 14, due to differences in definitions and coverage. Totals may not add due to rounding. TkBLE 17: Money Supply and Privately Owned Deposits of :Bolivians in United States Banks, 1953-1963 (in millions of :Bolivian pesos and millions of dollars) End of 1953 1954 1955 1956 1957 1958 3959 1960 1961 1962 1963 Money Supply (millions of pesos) 16.4 27.4 56,0 197.0 291.2 300.5 385.5 418.6 495.7 556.0 665.0. Notes in Circulation (inllions of pesos) 11.h 19.8 38.5 145.3 212.5 240.7 320.6 354.0 414.3 460.,1 540.1 Demand Deposits 1/ (.nlions of psos) 5.0 7.6 17.5 51.7 78.7 59.8 64.9 64.6 81.4 95.9 124.6 Percentage of Total Money Supply in Deposits 30% 28% 31% 26% 27% 20% 17%' 15% 16% »?£ 17 Equiv. in Millions of Dollars: a) Total Money Supply 18.2 14.3 13.1 25.3 33.3 33.8 32.5 35.1 41.6 46.7 55.4 b) Demand Deposits 1/ 5.5 4.2 4.1 6.6 9.2 6.7 5.4 5.3 6.8 8.1 10.3 Private Deposits of Bolivian Citizens and Private Firms in United States Banks (millions of dollars) 12.6 14.4 15.7 18.1 14.9 15.3 15.3 15.2 16.8 17.6 17.8 2/ 1/ Excluding Government deposits. 7/ End of the first quarter. Source: Central Bank of Bolivia and IFS. TA'BLE 18: Percentage Changes in Money Supply, Cost of Living, and Value of the Dollar. 1956-1963 1956 1957 1958 1959 1960 1961 1962 1963 Variation in Money Supply +252 +48 +3 +28 +9 +18 +12 +18 Cost of Living Index in La Paz +279 +116 +1 +20 +11 +8 +8 -1 Vnliip nf Dnlar nn Prpp Market +82 +11 +39 -0.4 - - - So -^.= rp"+ml 'Amnl- ~a Sttt4lT reu ndIFSM TABLE 19: Operationt of the IPublic Sector, 199-i96l (in millions of 3olivian pesos) 1959 1960 1961 Central Government income 26F5.8 303.9 383.0 Pxpenditure -430.7 -lb.9 -4o.8 -97.9 -481.9 -98.9 CO111BOL income 542.h 518.4 6jh.3 Expenditure -577.2 -34.8 -51L2.4 -24.0 -663.6 -53.8 YPFB income 150,9 12.3 177.9 Expenditure -131. 19.5 -106. 35.8 -183.8 -5.9 State Railroads Income 17.9 19.1 21.8 Expenditure -25.9 -8.0 -29.3 -10.2 -32.5 -10.7 CBF Income 27.2 38.6 1. 6 Expenditure -63.7 -36.5 -55.6 -17.0 -90.8 -39.2 Other Aaoncies Income 175.0 180.0 10$.0 Lx)enditure 200.0 -25.0 -200.0 -20.0 -2LiF.0 -60.0 assistance) -229.7 -133.3 -273.5 Financin_ 233.3 130.2 274.7 TIC tl---.tfI -I 4± IDB Grants - 154.1 - 85.1 3.0 279.7 Foreign Borrowing (net) -3.0 -45.4 -22.3 Domestic Borrowing 33.0 79.2 90.5 6.1 17.3 -5.0 Note: The figures for income and expenditures exclude ascertainable transfers of the Central Government to the rest of the public sector. Source: IMF. TABLE 20: Operations of the Public Sector, 1961-1963 (in milliorns of Bolivian pesos) 1961 Preliluinary Budget 1962 1963 Central Government Receipts 383.0 434.1 578.2 Experiditures 5.3 -137.3 -55^.5 -117.4 -619.2 - 41.0 COMIBOL Receipts 524.3 404.0 504.8 Expenditures -66.5 - 42.2 -548.3 -144.3 -630.8 -126.0 YPFB Receipts :172.2 219.7 233,3 Expenditures -L2.2 - 10.0 -245.2 - 25.5 -267.6 - 34.3 Qtate--R'ilroads Receipts 96.4 97.9 96.3 Expenditures -L08.'ý - 12.3 l09._9 - 12.0 =115.8 - 19.5 CBF Receipts 64.2 74.9 84.4 Expenditures 90.8 - 26.6 -115.5 - 40.6 =151. - 66.7 Other Agencies Receipts 252.9 250.9 263.4 Expenditures -268.7 - 15-253.9 - 3.0 -267.4 - .4.0 Total Deficit (- ) --/ -244.2 -342.8 -291.5 Page 2 TABLE 20; 03erations of the Public ,ect 196'_-1963 (in nillions of Bolivian pesos) Preliminary Bud-et 1961 1962 1963 Financing External Borrowin:- Drawings 2/ ¢206.7 245.5 n.a. Repaynents -.167.7 39.0 - 76.5 169.0 n.. 132.6 Domestic Bor-ow-n, (n t) 1onetry Department 23.2 46.8 -10.7 Other Banks -1.6 21.6 0.5 47.3 - -10.7 Use of US Counterpart Funds 2/ 192.5 181.1 .2/ 18.1 Other (net) -8.9 -54.6 . Total 244.2 342.8 291 .5 1/ Trans.ers from Central Government to various publicý enterprises are included in the receipts of the latter, so that iten III (Deficit) shows the censolidated deficit of the public sector. 2/ US ai- in the form of i-.A. 's not paid for are incluced with external borrowing. 2/ Jncludinw Bolivian pesos 59.6 million representing loans out of US-oimed counterpart funds. Source: LIF. TABLE 21: Operations of the Central Government 1959-1963 (in millions- of Bolivian pesos-) 1959 1960 1961 1962 1963 1/ I. Expenditures Budgetary Expenditures Expenditures of Ministries 200.9 217.8 267.2 301.0 n a Obligations of the State 2/ 146.1 347.C0 137.3 355.1 131.,0 398.2 131.3 432.3 n.a. 471.4 Extrabudgetary Expenditures T.8 69.6 92.6 68.1 34. B Investment Financed by US Loans _- 0.6 7.0 n.a, TOTAL 1_217. 121.71 _91. i TT02 II. Revenues Budgetary Revenues Personal Income Taxes 13.7 13.1 15.8 17.0 ) Business Income Taxes 19.6 23.8 27.1 29.9 ) 164.7 Indirect Taxes 108.5 119.1 142.,8 98.4 ) Import Taxes 68.2 81.1 125.1 195.3 )224.3 -Export Taxes 14.1 8.9 12.8 16.9 2%-Sal-es of Exchange Tax. 10.6 10.7 10.7 11.8 10.7 Other 7.6 242.3 7.0 263.7 5.3 339.6 6.5 375.8 10.2 10.%.9 Extrabudgetary Revenues 12.5 10o.8 14.5 14.2 10.0 TOTAL 23.7 27. 3 390.0 I19.9 III, Deficit (-) -167,0 -150.2 -137.3 -117.4 -86.3 IV. Financing US Budget Support Ordinary Grant Assistance 100.5 78.3 87.7 65.0 55.7 Extraordinary Loan Assistance - 100.5 - 78.3 17.8 105.5 L7v8 82.8 - 55.7 Domestic Borrowing (net) From Monetary Department 82.6 77.2 7.8 26.3 38.0 From Mining and Agricultural Banks -1.4 0.5 1,2 0.7 From Private Sector - 81.2 - 77.7 0.9 9.9 1.4 28.4 7.0 45.0 External 'Borrowing (net) -14.71 -r.8 21.9 6.2 -14.1 TOTAL -167T5 5T27 137.3 1/ Preliminary. 2/ Excluding debt amortization. Source: IMF. _L22._ I.L_-._ f_t_Lp_s9 .7-:L962 (in millions of US) dollars) 1962 1957 1958 1959 1960 1961 Jan- Jun Receipts: From concentrates sold and on hand (gross value) 51.8 43,7 42.7 4118 47.0 22.5 QeratingExienses Labor 24.0 18.1 21.7 24.1 25.9 12.6 1Naterials 11_.1 7•673 7 .9? 8• 4'4 Various 1.2 2.9 3.5 3.3 2.9 1.9 Centrai Office 1.2 1,1 .1.7 2.3 1.9 0.9 Loss on Machacaruarca-Uncia Railroad .6 .A Total Operating Cost.i 38.2 29.9 34.5 37.6 39.2 20.0 iealization Costs 21.1 15.2 14.1 13.4 17.0 9.2 Loss in Operations not included 2 2 > in cost Qr,erting Profit or Loss (--6 Before_Depreciation -2.1 -1.5 -6.0 -9.3 -9.2 -6. Deptreciation =2.9 -2. =1.9-8 NET OPi!tATING, -5.0 -4.3 -8.8 -12.0 -11.0 7.7 Net Profits or Losses (-) on Other Activities (incl.prior year adjustments) •.8 -2.2 2.3 -0.6 NE_TPR0ITORLO (-)FORE -0.2 -6.5 -11.1 -12.6 8 Source: National Mining Gorporation's Profit and Loss Statements. 1/ Profit of US$>47,000. 2,/ Less than US3'50,000. TABLE 23: Paym,nents to Forer Ovners of National ize1 -ines, 1953-1962 (in thousands of Ui dollars) Year Patino Aramoyo Hochshield Total 1953 176 176 2,578 2,930 1954 889 666 802 2,357 1955 1,500 389 1,018 2,908 1956 1,587 871. 789 3,247 1957 1,889 290 847 2,975 1958 749 259 415 1,424 1959 798 165 294 1,206 1960 812 200 235 1,247 1961. 920 350 459 1,729 1962 / 158 38 18 214 Total 9,428 3,354 7,455 20,237 Source: Mining Corporation of Bolivia. 1/ Total for year. No payments are being made at present. TABIE 24: U.$. Assistance to Bolivia, Fiscal Years 1957/58 - 1961/62 (in millinn.q nf Uq dollaprs) 1957/ 1958/ 1959/ 1960/ 1961/ 1958 1959 1960 1961 1962 A. Technical Assistance Obligation 2.8 3.3 1,7 1.5 5.3 Disbursement 3.5 3.0 2.4 1.5 1.8 B. Economic Assistance Obligation 7.1 12.2 7.0 9.0 9.5 Disbursemnent 6.3 8.7 8.5 6.)4 12.2 Supporting Assistance; project Obligation 1. 0.2 0.3 0.2 4.2 Disbursement 4.2 1.0 0.3 0.3 0.3 Supporting Assistance; non-project Obligation ,10.2 4.2 7.3 13.4 5.3 Disbursement 10.2 4.2 5.8 i.6 1.0 To tal Obligation 18.7 16.6 14.6 22.6 19.0 Didbursement 20.7 13.9 14.b 8.3 13.5 C. PL J!80 Obligation - - - 3.3 4.1 Disbursement - - - 3.3 4.h D. DLF Loans Obligation - 2.5 - 8.8 5.4 Disbursement - 2.5 - 1.8 3.6 Total Obligation 21.5 22.4 18.0 31.5 37.2 Dibrmntn+' 24.2 19.4 17.0 17.9 23.3 Sounre: AID/Bolivia and AlD/t,ashing ton. TABLE 25: Development M' Local Currency Balances, (in billions of bolivianos) 1958/59 1959/60 1960/61 1961/62 Cash balance; beginning of year 41.2 98.9 117.3 100.9 Collections 175.6 181.3 143.1 265.1 Withdrawals 117.9 162.9 159.5 287.1 Cash balance; end of year 98.9 117.3 100.9 58.9 Change in Cash balance duringyear +57.7 +18.4 -16.h -2.0 Unobligated cash balance; end of year 96.1 116.5 60.0 15.3 Source: AID/Bolivia. Note: See note to Table 15. TABLE 26: Balance of Payments, 1957-1963 (in millions of US dollars) 1957 1958 1959 1960 1961 1962 1963 A. Goods and. Services and Private Transfers Exports, f.o.b. 76,.9 52.3 61,6 54.4 59.9 62.0 71.9 Imports, f.o.b. -85.9 -74.1 -72,4 -70.3 -75.5 -91.5 -10.5 Freight and. Insurance on Imports -13,7 -113 - 9.7 -10.2 -11.3 -14.3 -16.3 Other Services (net) -10.6 -10.0 -14.6 - 7.0 - 5.6 - 5.6 - 7.0 Private Transfers 0.,3 0.2 0.11 0.2 0.4 1.4 0.7 Total -33..0 -42.9 -2540 -32.9 -32.1 -48.4 -55.2 B. Economic Aid and Official Long-term Capital Movements US Government Dollar Grants 1206 14*5 9.7 na. 1 Government Grants and Loans in Pesos 25.6 21443 2142 0.4 8.5 n US Holdings of Pesos (Decrease -) 8 1.0 -2.3 n.a. US Government Loans -O.a -0.4 2.1 0.2 10.9 12.0 n.as -UN Grants n.a. n.a. n.a. 0.5 0.5 n.a. IDE - IDE -3.4, 4..- i. Loans from other Governments 64.8 2-.0 3o0 3.4 nta Loans from Tin Smelters -3,2 1,5 -4.0 1.7 n.a. Subscriptions to International Institutions -2.1 -2.9 -3,1 -0.2 -1.2 -0.9 noaa Suppliers' Credits 3 3.5 -14,0 -2.4 -0.3 -2.0 n.a. Indemnification of Former Kine Owners -3,0 -1444 -1.2 -1.2 -1.5 -0.2 n.at Other -o.6 0,7. 0.2 1 10. 1.8 n.a. Total 20.1 23448 21,9 311.6 28.0 36.3 55.9 C.* Private Capital Movements Direct Investment 6.9 -0.6 154,5 16.5 11.4 10.1 5.9 Commercial andn Specialized Banks -2.3 -3.5 -. -.1 0.7 -0.2 -0.9 Other 8.6 2.0 - 3,5 0.1 -130 -1.0 Total 13.2 15441 16,.2 16,.5 10.8 8.9 5.0 D. Net Errors and Omissions 4-.3 2.8 -16,5 -0.,8 -1.8 -2.7 n..4 TOTAL A - D 4.6 -2.9 -0.8 -2.8 2.6 -4.1 5.3 ----------------------------------- -3.0-----------1.-2 -2-1.5-- - o.2--n.a.- Page 2 TABLE 26s Balance of Pakyments,, 1957-1963 (in millions of US dollars) 195? 1958 195 1960 1961 1962 1963 F. Monetary Novements Net IM Position 1.0 2.0 2.h -1.3 -2.0 1.3 1.3 Paymients Agreements (net) -1.1 -3.- 2.,5 4.9 -0.1 -0.6 -0.1 Other Net Central Bank Foreign Assets (inc. -) -h.7 h.1 -4.1 -0.8 -0.5 5.4 -6.4 Monetary Gold (inc. -) 0.2 -0,. - - - -2.0 -0. i TOTAL -4.6 2.9 0.8 2.8 -2.,6 4.1 -5.3 Source: IIE Balance of Payments Yearbook; Central Bank of Bolivia, and IMF. TABLE 27: Gross Value of Exports!/ Classified by Cormoditly L948 and 1952-1963 (in millions of US dollars) 158 1952 1953 1954 1955 1956 1957 L958 1959 1960 1961 1962 1963 Tin 80.2 84.8 72.9 Sh.9 57.3 59,2 57.4 :36.3 52.9 4219, 50,3 '5140 57.3 Tungsten 2.9 14.2 13.7 J4.2 15.7 14.5 6.4 1.2 1.3 1.5 2.3 1.7 1.2 Lead 10.1 116 7.1. 5.6 6.3 7.6 8, 5.9 It.9 6,8 4.L 3.5 4.3 Zine 2.8 13.2 5.6 4.7 5.7 5,.0 5.A 3.2 0.9 1.1 1.3 0.9 1.2 Silver 5.5 6.0 5o3 4.4 5.0 6,7 4.8 5.3 4.1 h.5 3.6 3.9 5.9 Antimony 6.2 4.,2 1.8 1.7 1.9 1.5 1.7 1.3 1.5 1.h 2.2 n.a. n.a, Copper 3.1 2,9 2.9 2.4 2.7 4.1 2.6 1.5 1,7 15 1.3 n.a. n.a. Other Minerals 0.1 1.1 1.3 8,3 3,2 1.5 1.8 1.0 .8 2.2 3.6 n,a. -n,a. Sub-Total Exports 110.0 137.8 110.6 56.2 97.8 100.2 88.5 55.7 69.1 59.9 69.1) n.a. n.a. Petroleum (crude - refined) n.a. n.a. n.a. n.a. 2.3 2.9 4.6 5.1 3.1 3.7 2,2. n.a. n.a. All Other Products n.a. n.a. n.a. n.a. 2,3 3.5 4,6 309 5.5 4.2 4.9 n.a. n.a. Total Exports 112,8 141.3 112.7 99.5 102.4 106.6 97.7 64.7 77.7 67.8 76.1 76.1 82.5 1/ Exports on c.i.f. basis, but exclude contraband exports. 7/ Including gold. n.a. Not available. Source: Central Bank of Bolivia and IMF. TABLE 28: Volme and Price Indices of Exports, 1953-1963 (1958 = 100) 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 Volume Index Total 173 144 14h 11 15 100 117 99 102 104 112 in 196 162 157 151 157 100 135 109 n5 121 128 Tungsten 172 199 24,2 215 196 100 109 96 126 113 102 Lead 104 80 8 95 115. 100 97 94 89 81 88 Zinc i69 143 150 120 138 100 2 28 37 26 33~ Silver 101 83 98 12-4 88 100 74 81 64 62 81 Price Index Total 114 11.4 113 121 108 100 105 107 113 n6 118 lin 102 102 100 108 101 100 108 108 120 123 123 Tungsten 669 625 54.2 564 272 100 101. 129 153 123 95 Lead 114 118 127 135 125 100 86 87 78 71 81 Zinc 102 102 118 130 121 100 112 126 111 112 113 Silver 98 96 96 101 98 100 104 104 104 119 137 Source: International Financial Statistics. TABI2 Prices of Main Export Commodities in Major Markets, 194,8 1952-963 (US dollars per 100 lbs.14 1948 1952 1954 1956 1958 1959 1960 1961 1962 1963 I II III I Tin United States 99.2 120.1 92.1 101.1 95.0 102.0 101.3 113.1 114.5 109.7 116.5 115.9 124.5 -4Jited Mingdom 99.2 120.6 89.9 98.5 91.9 98.2 99.6 110.1 112.1 106.6 112.2 114.2 121.9 Copper United States kcomest.c> 2 2.50 9.96 83-26;25 -31-L2 -32.50-3 30- 31.00-31-00-31-00--3h--31-00- United Kingdom 24.12 32.68 31,34 40.52 24.68 29.90 30.63 28.71 29.28 n.a. n.a. n.a. n.a. Lead United States 18.04 16.52 14.10 16.00 12.20 12.20 11.92 10.85 9.62 10.50 10.60 11.35 12.17 United Kingdom 17.18 16.76 12.10 1h.57 9.12 8.82 8.95 8.04 7.00 6.95 7.7, 8.37 8.95 Zinc United States 14.20 17.11 11.22 24.00 10.80 11.90 13.46 12.0h 12.00 12.00 12.10 12.60 13.20 United Kingdom 14.4o 18.52 9.82 12.24 8.32 10.32 11.09 9.72 8.43 8.81 9.44 9.54 11.07 Unit values of the period or averages of monthly quotations during the period. Source: International Financial statistics. TABLE su: Gommoulty -ompos.1xon of Recorcea Lmports kC11) 1957-1963 (in millions of US dollars) 1957 1958 1959 1960 1961 1962 1963 A. Food and Beverages 25.1 15*3 1b,0 13,9 n,a. n,a. n.a. wheat 5.1 0.4 1.1 - Wheat Flour 5.2 5.2 5.1 6.1 Sugar 6.6 3.4 43 2,2 Powdered Milk 1.8 0.3 O6 0.9 Rice 1.8 1.4 0,9 O3 Other 4.6 4.6 4.0 4.4 B. Live Ani;mals 0.9 0.2 - - n,a. n.a. n.a. C. Raw Materials 5o7 4.7 5eo 5,9 n.a. n,,a. n.a. D. Manufactures 60.3 59.3 44Oo 51.7 n,a. n.a. n.a. Textiles 2.2 2.4 1.3 1.9 Iron Manufactures 6.1 8.7 5.9 6.0 'rucks 2.9 6.7 3.0 4.5 Other transport equip- ment 1.6 2.2 2.3 2.2 Chemicals and Pharma- ceuticals 4.8 5.5 3.5 4.7 Industrial machinery 6.2 5.9 5.4 4.8 Mining machinery 7.8 5.8 6.0 7.5 Other 28.7 22,1 16,6 20,1 Total Imports 92.0 79.6 65.0 71.5 77.7 97.7 100.9 Source: Central Bank of Bolivia and iF, TABLE 31: Price of Exports. Imports and Terms of Trade 19511 1953 and, 2955-1963 (1958 = 100) 1951 1953 1955 1956 .957 1958 1959 1960 1961 1962 1963 Price of exports 152 114 113 121 108 100 105 107 113 116 118 Price of importsY 101 100 97 99 102 100 100 98 98 97 96 Ters of trade 141 114 116 122 106 100 105 109 115 120 123 1 1 Prices of imports for Pl of Lttin Amperica. Souvre: Inteprnationanl Financ-ial StptiRtic. TA3LE 32: Gold and Foreign Exchange Reserves of the Banking System at the end of each Period, 1953-1963 (in millions of US dollars) 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 Gold 23.3 61 123 2.2 1., 1.4 1.2 1.2 1.0 3.0 2.1 Convertible Currencies 7.3 12.5 11.7 4,6 7.8 2.2 6.2 6.8 7.1 2.3 10.7 Non-Convertible Currencies 0.1 0.4 0.7 - 0.3 4.3 6.0 0.6 0.2 - - Total 30.7 19.0 13.7 6.8 9.5 7.9 13.4 8.6 8.3 5.3 12.7 Net IMIF Position - - - -3.0 -4.0 -6.0 -5.3 -3.9 -1.9 -3.2 -.5 Source: INF and Central Bank of Bolivia.