COUNTRY PRIVATE SECTOR DIAGNOSTIC - THE PLURINATIONAL STATE OF BOLIVIA - Unlocking Private Sector Potential to Achieve a Sustainable and Inclusive Recovery - Executive Summary - December 2021

Jul 19, 2026

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The executive summary reviews Bolivia’s private-sector performance and macroeconomic conditions in the context of recovery and the COVID-19 shock. It highlights strong poverty reduction during 2002–2014, followed by slower gains after 2014 as growth strategies increased public debt and exhausted fiscal buffers. Limited private investment, low export competitiveness, and an overvalued exchange rate weakened diversification. The pandemic contracted output in 2020, hit micro and small firms hardest, and risks long-lasting employment and business setbacks without targeted intervention.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages22

Reading Time55 min

AccessFree to download

Executive Summary

Background and macroeconomic shift

Public investment, low private investment, and competitiveness

COVID-19 impacts on enterprises and jobs

Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public COUNTRY PRIVATE SECTOR DIAGNOSTIC THE PLURINATIONAL STATE OF BOLIVIA Unlocking Private Sector Potential to Achieve a Sustainable and Inclusive Recovery Executive Summary December 2021 About IFC IFC—a member of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create marketsand opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, [visit www.ifc.org](visit www.ifc.org). © International Finance Corporation 2021. All rights reserved. 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 [www.ifc.org](www.ifc.org) The material in this work is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. IFC does not guarantee the accuracy, reliability or completeness of the content included in this work, or for the conclusions or judgments described herein, and accepts no responsibility or liability for any omissions or errors (including, without limitation, typographical errors and technical errors) in the content whatsoever or for reliance thereon. The findings, interpretations, views, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the Executive Directors of the International Finance Corporation or of the International Bank for Reconstruction and Development (the World Bank) or the governments they represent. Cover Photos: Marka Registrada / World Bank, and Puerto Jennefer EXECUTIVE SUMMARY In a period of consistent growth fueled by a commodity boom and expansionary government policies, Bolivia was able to significantly reduce poverty and inequality over the past couple of decades. Gross domestic product (GDP) averaged 4.6 percent between 2002 and 2014, and poverty declined from 63.3 percent to 39.1 percent over the same period. The drop in oil and gas prices from 2014 onward led to a strategic shift, and Bolivia made use of both the buffers that it had accumulated during the economic bonanza and expansionary policies to sustain growth and poverty reduction. During that time, economic growth averaged 4 percent between 2014 and 2019, and poverty declined to 34.6 percent in 2018, although at a slower pace than in the previous period. 1 The expansionary policies implemented after the commodity boom have, on the other hand, increased public debt and reduced fiscal savings and reservesand have exhausted their reach. Public investment nearly doubled in Bolivia from 2005 to 2018, but the Bolivian economy has remained structurally static. During this period, the hydrocarbon sector accounted for most of its exports and foreign direct investment (FDI), and private investment remained low. At an average of 7.2 percent, this is about 60 percent lower than regional peers, putting Bolivia in the bottom 15 worldwide even during favorable economic times. At the same time, the average efficiency gap of public investment2 in Bolivia is about 41 percent, well above the average gap of 27 percent for emerging market economies and 29 percent for Latin American and Caribbean countries. The fixed exchange rate system has also limited the tools useful for addressing macroeconomic imbalances, and at the same time, the high real exchange rate overvaluation—estimated between 26 and 33 percent3—has hindered the competitiveness of exports from non-extractive sectors and local products competing with imports. Combined with the sharp decline in commodity pr

FAQs

What major economic trends are described for Bolivia before and after 2014?

Bolivia experienced consistent growth during 2002–2014 driven by commodities and expansionary government policies, with poverty reduction. After 2014, falling oil and gas prices triggered a strategic shift, growth slowed, and policy effects increased public debt while reducing fiscal buffers.

Why is private sector investment described as low in Bolivia?

Private investment remained low while hydrocarbon exports and foreign direct investment dominated. The summary points to an efficiency gap in public investment, constraints from the fixed exchange rate system, and exchange rate overvaluation that hindered competitiveness of non-extractive exports.

How did COVID-19 affect Bolivia’s private sector, especially small firms?

The crisis contracted economic output and increased poverty due to job losses. Impacts were more severe for micro and small firms that are largely informal and have few mechanisms to sustain shocks, with lasting consequences expected without intervention.

Jul 19, 2026

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