Bolivia has undergone a period of profound change since the Government of President Morales came to power in January 2006. The Morales administration has implemented an array of economic and social policies to empower indigenous peoples and reduce poverty and inequality.
Macroeconomic results have been positive, with regular fiscal and current account balances for the first time in decades, declining public debt and steady 4.5 percent annual growth rates over the past seven years. In the nearly six years since Mr. Evo Morales was elected as Bolivia's first indigenous president, the country has experienced significant socio-political and economic change.
Driven by high commodity prices and prudent fiscal and monetary policies, Bolivia's economy has had an annual average growth of 4.5 percent for the past seven years, increasing per capita income by 18 percent. Current account surpluses have prevailed since 2003, and the fiscal balance turned positive in 2006 for the first time in decades. Thanks to this positive macroeconomic performance and debt relief, gross public debt dropped from 96 percent of gross domestic product (GDP) in 2003 to 40 percent in 2010 while international reserves increased from less than $1 billion to nearly $10 billion over the same time span. Despite progress, Bolivia faces major development challenges.
It has one of the lowest GDP per capita levels in the Latin America and Caribbean (LAC) region, moderate poverty afflicts more than half of the population and income inequality is still very high. Recent economic growth is vulnerable to shifts in international commodity prices and total investment is low, limiting economic expansion. This four-year World Bank Group (WBG) Country Partnership Strategy (CPS), agreed upon with the Government, proposes a viable medium-term program for addressing some of Bolivia's challenges.
During the consolidation of the reform process initiated by the election of the Government of President Morales, the World Bank Group (WBG) has operated through two consecutive Interim Strategy Notes (ISNs), following the recommendation from the 2005 country assistance evaluation to use shorter-term strategies in the face of high uncertainty.
Now that the conditions for the implementation of a CPS are in place a new constitutional framework, consolidated policy environment, sound macroeconomic situation, good dialogue between the WBG and authorities and improved implementation capacity and the Government has requested Bank support through a medium-term strategy.
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