IMF Approves 36-Month Loan Program for Bolivia

Washington, DC: The Executive Board of the International Monetary Fund (IMF) approved today a 36-month arrangement under the Extended Fund Facility (EFF) for Bolivia, with access of SDR 1.369 billion (570 percent of quota, or about US$1.9 billion). The Board's approval allows the authorities an immediate disbursement of SDR 156 million (about US$214 million). Subsequent disbursements will be phased over the duration of the arrangement, contingent on the completion of program reviews.

The authorities' EFF-supported program aims to restore macroeconomic stability, strengthen social safety nets, rebuild international reserves, reduce fiscal and external vulnerabilities, foster financial sector resilience, and lay the foundations for sustainable, inclusive, private sector-led growth.

Fiscal measures, supported by stronger fiscal institutions and more efficient spending, will help place public debt on a firm downward trajectory while protecting vulnerable households. The program will also promote a more flexible exchange rate regime, enhance monetary policy and financial supervision frameworks, and advance reforms to improve governance, transparency, and the business environment, to promote private investment and a job-rich recovery. IMF support is expected to catalyze additional financing from other international financial institutions.

Following the Executive Board's discussion on Bolivia, Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair, made the following statement:

"The Bolivian authorities have taken significant actions over the past year to address long-standing macroeconomic imbalances. The Extended Fund Facility arrangement will support their reform program to restore macroeconomic stability, protect the most vulnerable, strengthen fiscal sustainability, rebuild buffers, foster financial resilience, and promote private sector-led inclusive growth. Sustained implementation, robust contingency planning, and multilateral support will be critical for the program's success."

"Fiscal sustainability is the program's central anchor, while strengthening support to vulnerable households. The frontloaded fiscal effort includes phasing out remaining fuel subsidies through an automatic pricing mechanism alongside stronger and better-targeted social protection. Enhancing expenditure efficiency, addressing arrears, reforming public enterprises, and strengthening fiscal institutions, including a medium-term fiscal framework anchored in debt reduction, will support the adjustment."

"A market-determined exchange rate and preserving a credible monetary framework are essential to promote external balance and sustain price stability. The elimination of new central bank budget financing and the transition to reserve money targeting are important steps in this regard. Prudent liquidity management, reserve accumulation, foreign exchange intervention limited to addressing disorderly market conditions, and reforms to strengthen central bank autonomy, governance, and accountability will be critical to bolster credibility."

"The authorities are taking welcome steps to strengthen financial sector supervision and crisis preparedness. Close monitoring of vulnerabilities remains critical, while modernizing prudential standards. Reforms to strengthen the anti-money laundering and counter-terrorism financing frameworks will also be important."

"The authorities' structural reform agenda aims to improve the business environment and governance, reduce market distortions, attract private investment, and promote formal employment. Well-sequenced capacity development and clear communication of program objectives will be essential to support timely implementation and sustain public support for the program."