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Working Papers
Bolivia’s Economic Pivot: Main Findings and Reform Priorities
This publication synthesizes the main findings and recommendations from a series of reports on Bolivia’s Economic Pivot. We examine the origins of the current crisis and propose a strategy to […]
This publication synthesizes the main findings and recommendations from a series of reports on Bolivia’s Economic Pivot. We examine the origins of the current crisis and propose a strategy to restore macroeconomic stability while supporting long-term growth. Bolivia’s macroeconomic collapse is the most visible symptom of a much deeper crisis. While the contraction of natural gas production was a key trigger, the country’s crisis stems from a broader institutional breakdown that weakened private investment, export capacity, and productivity growth across the economy. In response, we outline a comprehensive reform plan based on 5 pillars: 1) a growth-enhancing and credible fiscal consolidation; 2) an effective and targeted social compensation network; 3) a restoration of external balance and monetary credibility; 4) renewed investment attractiveness and restored export potential in strategic sectors; and 5) a new institutional foundation for developing new productive capabilities.
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Working Papers
Bolivia’s Economic Pivot: The Making of a Macroeconomic Crisis
Bolivia’s macroeconomic crisis was long in the making. A temporary commodity windfall and a gas export engine built in the 1990s delivered a decade of growth, rising fiscal revenues, and […]Bolivia’s macroeconomic crisis was long in the making. A temporary commodity windfall and a gas export engine built in the 1990s delivered a decade of growth, rising fiscal revenues, and an unprecedented buildup of foreign assets. But instead of using that window to build new sources of tradable income and productive capacity, the country adopted policies that gradually weakened the very gas sector on which the model depended. As gas production and hydrocarbon revenues fell, the state chose to preserve spending and the fixed exchange rate. The result was a sequence of increasingly costly stopgaps: first the depletion of international reserves, then the collapse of the peg, the rise of the inflation tax, and financial repression. In the process, households saw the real value of their savings eroded through the pension system and bank deposits. This paper shows how that strategy delayed adjustment for nearly a decade while making the eventual crisis more severe. Using counterfactual benchmarks for output and the real exchange rate, it quantifies the cost of delay and the scale of the distortions that any stabilization program must now unwind.
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Working Papers
Bolivia’s Economic Pivot: Early Macroeconomic Achievements and Remaining Challenges
This paper assesses Bolivia’s macroeconomic stabilization prospects through a macro-financial scenario framework, comparing three distinct trajectories: a counterfactual absent any reforms, the path under reforms implemented or announced to date […]This paper assesses Bolivia’s macroeconomic stabilization prospects through a macro-financial scenario framework, comparing three distinct trajectories: a counterfactual absent any reforms, the path under reforms implemented or announced to date (April 2026), and one that assumes a select set of additional reforms. Bolivia’s crisis, rooted in the absence of fiscal adjustment after the collapse of natural gas revenues, ranks among the most challenging in this century. Absent any reform, Bolivia was on the verge of a collapse, including a sharp contraction of imports, deep recession, runaway monetary financing, accelerating inflation, and a high probability of external default. The new government’s initial measures have reduced immediate risks. However, the initial reform package remains insufficient for full stabilization. The paper describes a feasible set of additional reforms to achieve stabilization and growth. An expansionary fiscal consolidation is still possible if reforms are carried out following a specific set of conditions, given Bolivia’s current economic constraints. Stabilization and growth are achievable, but the window of opportunity will narrow if critical reforms are delayed.
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Working Papers
Bolivia’s Economic Pivot: Reviving the Energy Sector
Bolivia’s energy system is in structural decline. Natural gas production has fallen 54% since its 2014 peak, collapsing export volumes and turning hydrocarbons from a fiscal engine into a net […]Bolivia’s energy system is in structural decline. Natural gas production has fallen 54% since its 2014 peak, collapsing export volumes and turning hydrocarbons from a fiscal engine into a net drain on reserves. The cause is institutional, not geological: the 2005–2009 nationalization cycle increased state revenue capture during the commodity boom but weakened the incentives for long-term exploration. Fuel and domestic gas subsidies compounded the problem, distorting price signals and crowding out renewable investment. The current administration’s January 2026 fuel reform raised diesel prices by 163% and gasoline by 86%, but the heightened global oil prices have displayed the remaining structural weakness and domestic gas subsidy remains untouched, costing Bolivia over $900 million in forgone export earnings in 2025 alone. The reform agenda requires three priority actions: embedding fuel prices in a rules-based formula; restructuring hydrocarbons contracts to restore exploration incentives; and accelerating renewable energy deployment to free up natural gas for export.
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Working Papers
Bolivia’s Economic Pivot: Unlocking the Mining and Lithium Potential
Bolivia’s mining sector holds exceptional potential. The country possesses one of the world’s largest lithium resources, ranks fifth in global silver production, and is the fourth-largest zinc exporter. Yet output […]Bolivia’s mining sector holds exceptional potential. The country possesses one of the world’s largest lithium resources, ranks fifth in global silver production, and is the fourth-largest zinc exporter. Yet output has stagnated for over a decade: no large-scale mine has entered production since 2014, and export growth reflects rising prices, not increased output. The regulatory environment is the central constraint: administrative contracts cannot be transferred or used as collateral, large areas are reserved for state enterprises, and Bolivia’s withdrawal from international arbitration has weakened investor protection. Cooperatives and private firms coexist without a framework for formal collaboration, generating conflicts and fiscal distortions. Roughly 60% of Bolivia’s territory remains geologically unexplored, raising exploration risk and limiting the discovery of new deposits. This publication proposes a reform agenda spanning the regulatory, institutional, and fiscal dimensions of the sector, with particular attention to lithium as Bolivia’s most significant untapped opportunity.
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Working Papers
Bolivia’s Economic Pivot: Agricultural Potential and Challenges
Bolivia’s agricultural sector has grown faster over the past two decades than in any period since 1960, but this growth has been driven by the expansion of cultivated area rather […]Bolivia’s agricultural sector has grown faster over the past two decades than in any period since 1960, but this growth has been driven by the expansion of cultivated area rather than by improvements in productivity, while the prevailing policy regime has restricted exports and left significant potential unrealized. Yields for key crops continue to underperform regional peers, and continued expansion of the agricultural frontier risks both environmental costs and reduced access to international markets that increasingly penalize deforestation-linked products. Drawing on cross-country comparisons, case studies of Bolivia’s major crops, and lessons from Peruvian agricultural diversification, this analysis identifies a recurring set of production- and market-side constraints, including restrictions on transgenic seeds, weak R&D and extension services, phytosanitary and logistics gaps, and the lack of commercially-oriented irrigation. Because these constraints interact differently across Bolivia’s diverse agricultural geography, we propose launching a National Strategy for Agricultural Potential to enable each of Bolivia’s distinct agricultural regions to reach its productive frontier. Export diversification would emerge as a natural outcome as more of Bolivia’s regions realize their potential, generating the additional foreign exchange needed to ease the country’s ongoing macroeconomic crisis.
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Working Papers
Bolivia’s Economic Pivot: A Growth Diagnostics of the Tourism Sector
Tourism represents a strategic opportunity for Bolivia to generate foreign exchange and support more inclusive growth. This report aims to quantify the opportunity, identify binding constraints and propose solutions. Using […]Tourism represents a strategic opportunity for Bolivia to generate foreign exchange and support more inclusive growth. This report aims to quantify the opportunity, identify binding constraints and propose solutions. Using a gravity model of international tourism, we find that Bolivia performs significantly below its potential with an unrealized gap of more than USD 370 million. Applying Growth Diagnostics heuristics, we identify two constraints and suggest policy responses. At the national level, weak international air connectivity limits Bolivia’s access from key source markets. Accordingly, the report recommends a package of reforms to improve aviation competitiveness and air access. At the local level, coordination failures and governance issues hinder the emergence of strong tourism ecosystems, particularly in the Salar de Uyuni circuit. We propose a new destination-level governance architecture to facilitate coordination, align incentives, and deliver stronger benefits for local communities.
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