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IMF lauds Bolivia reforms but says more is needed

WASHINGTON: The International Monetary Fund said on Friday that Bolivia had made progress in achieving economic stability despite the global financial crisis of the late 1990s, but noted there was more to be done.

Bolivia has managed solid economic growth despite "some adverse shocks" and pushed its inflation to its lowest in 30 years in 1999, down to levels similar to those of industrialised countries, the IMF said in a report summarizing the views of its executive board.

The IMF's directors lauded Bolivia for sticking to fiscal discipline amid the financial crisis, lower-than-expected tax revenues and low international commodity prices, saying this had been "a difficult challenge to Bolivia".

"They praised the authorities for resisting pressure to increase external protection and grant relief on tax and interest obligations, and commended their steadfast efforts to maintain sound macroeconomic policies," said the report.

However, it said poverty and social indicators did not improve as much, as the country focused on structural reforms rather than social spending, though the latter also increased.

Key structural reforms were adopted in 1999, the IMF said, listing a new customs law, stronger financial regulations and the sales of state smelting company Vinto and the refineries of oil company YPFB.

But while there has been progress, more reform was needed, the IMF said.

"In Directors' view, further efforts were needed to strengthen the macroeconomic framework, deepen structural reforms and develop a comprehensive strategy to reduce poverty and improve the conditions of the poor."

The IMF's board was therefore encouraged with Bolivia's commitment to continuing with reforms this year, the report said, citing plans to modernise the tax system and to strengthen the country's financial system.

It also commended Bolivia's commitment to tackle poverty, saying: "Noting that Bolivia's social needs remain very large, Directors welcomed the progress being made to develop and implement a comprehensive strategy to reduce poverty."

Assistance from the enhanced Initiative for the Heavily Indebted Poor Countries (HIPC) would help Bolivia meet its social needs, the report said.

Earlier this month Bolivia became one of the first nations to qualify for an improved plan, sponsored by the IMF and World Bank, which rewards nations with a strong track record on economic reforms but have a heavy debt burden.-Reuters