Bolivia at a glance 12/14/03

Transcription

1 Annex A1 Bolivia at a glance 12/14/03 Latin Lower- POVERTY and SOCIAL America middle- Bolivia & Carib. income 2002 Population, mid-year (millions) ,411 GNI per capita (Atlas method, US$) 910 3,280 1,390 GNI (Atlas method, US$ billions) 7.9 1,727 3,352 Average annual growth, Population ( % ) Labor force ( % ) Most recent estimate (latest year available, ) Poverty (% of population below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of children under 5) Access to an improved water source (% of population) Illiteracy (% of population age 15+) Gross primary enrollment (% of school-age population) Male Female KEY ECONOMIC RATIOS and LONG-TERM TRENDS GDP (US$ billions) Gross domestic investment/gdp Exports of goods and services/gdp Gross domestic savings/gdp Gross national savings/gdp Current account balance/gdp Interest payments/gdp Total debt/gdp Total debt service/exports Present value of debt/gdp Present value of debt/exports (average annual growth) G DP GDP per capita Exports of goods and services Development diamond* GNI per capita Life expectancy Access to improved water source Bolivia Economic ratios* Domestic savings Lower-middle-income group Bolivia Trade Indebtedness Gross primary enrollment Investment Lower-middle-income group STRUCTURE of the ECONOMY (% of GDP) Agriculture Industry Manufacturing Services Private consumption General government consumption Imports of goods and services Growth of investment and GDP (%) GDI GDP (average annual growth) Agriculture Industry Manufacturing Services Private consumption General government consumption Gross domestic investment Imports of goods and services Growth of exports and imports (%) Exports Imports Note: 2002 data are preliminary estimates. * The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. 51

2 Annex A1 Bolivia PRICES and GOVERNMENT FINANCE Domestic prices (% change) Consumer prices Implicit GDP deflator Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surplus/deficit TRADE (US$ millions) Total exports (fob) ,285 1,299 Zinc Silver Manufactures Total imports (cif) 554 1,131 1,708 1,770 Food Fuel and energy Capital goods Export price index (1995=100) Import price index (1995=100) Terms of trade (1995=100) BALANCE of PAYMENTS (US$ millions) Exports of goods and services ,521 1,534 Imports of goods and services 681 1,277 1,979 2,049 Resource balance Net income Net current transfers Current account balance Financing items (net) Changes in net reserves Memo: Reserves including gold (US$ millions) , Conversion rate (DEC, local/us$) 1.20E EXTERNAL DEBT and RESOURCE FLOWS (US$ millions) Total debt outstanding and disbursed 3,328 4,235 4,676 4,535 IBRD IDA ,146 1,320 Total debt service IBRD IDA Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers Inflation (%) Current account balance to GDP (%) ,500 2,000 1,500 1, GDP deflator Export and import levels (US$ mill.) Exports Imports Composition of 2002 debt (US$ mill.) E: 196 A - IBRD B - IDA C - IMF F: 941 D: 1,845 G: 38 D - Other multilateral CPI B: 1,320 C: 195 E - Bilateral F - Private G - Short-term Development Economics 12/14/03 52

3 Annex B1 CAS Annex B1- Bolivia Key Economic & Program Indicators - Change from Last CAS Prepared for all CASs/Progress Reports, but included in Board version of Progress Reports Only As Of Date 11/24/2003 Economy (CY) 1999 b 2000 b 2001 b 2002 b 2001 c 2002 c 2003 a 2004 b 2005 b 2006 b Growth rates (%) GDP Exports Imports Inflation (%) National accounts (% GDP) Current account balance Gross investment Public finance (% GDP) Fiscal balance Foreign financing International reserves (as months of imports) Program (Bank s FY) FY99 a FY00 b FY01 b FY02 b FY01 c FY01 c FY03 d FY04 b FY05 b FY06 b Lending ($ million) Gross disbursements ($ million) a. Estimated year b. Projected year c. Actual outcome Forecast in Last CAS Actual Current CAS Forecast 53

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5 CAS Annex B2 - Bolivia Selected Indicators* of Bank Portfolio Performance and Management As Of Date 11/24/2003 Annex B2 Indicator Portfolio Assessment Number of Projects Under Implementation a Average Implementation Period (years) b Percent of Problem Projects by Number a, c Percent of Problem Projects by Amount a, c Percent of Projects at Risk by Number a, d Percent of Projects at Risk by Amount a, d Disbursement Ratio (%) e Portfolio Management CPPR during the year (yes/no) yes yes yes yes Supervision Resources (total US$) $1,314,028 $1,264,134 $1,622,500 $1,583,088 Average Supervision (US$/project) $65,573 $60,197 $90,139 $87,949 Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 55 7 Proj Eval by OED by Amt (US$ millions) 1, % of OED Projects Rated U or HU by Number % of OED Projects Rated U or HU by Amt a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 55

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7 Annex B3 CAS Annex B3 - IBRD/IDA Program Summary As Of Date 11/24/2003 Bolivia Proposed IBRD/IDA Base-Case Lending Program a Fiscal year Proj ID US$(M) Strategic Rewards b (H/M/L) Implementation b Risks (H/M/L) 2004 Emergency Economic Recovery Credit (IDA) 14.0 H M 1st Programmatic Bank and Corporate Restructuring Program 30.0 H M Social Sector Programatic (IDA) 20.0 M\ M nd Programmatic Bank and Corporate Restructuring Program 25.0 H M Spatial Sustainable Development 21.0 H M Land Reform 15.0 H M Institutional Reform II (IBRD) 20.0 H L Secondary Education (IBRD) 15.0 H M Note: The total amount of IDA financing would be US$49 milllion for FY04 and US$36 million in FY05. The total amount of IBRD financing would be US$15 million in FY04 and US$60 million in FY05. 57

8 CAS Annex B3 (IFC & MIGA) for Bolivia Annex B3 Bolivia - IFC and MIGA Program, FY IFC approvals* (US$m) n.a. 169 Sector (%) B - Oil, Gas and Mining C - Utilities E - Transportation and Warehousing 3 8 F - Food & Beverages G - Chemicals 32 L - Plastics & Rubber N - Information 45 O - Finance & Insurance Total n.a. 100 Investment instrument(%) Equity 1 4 Loan Quasi-equity (Loan type) Risk Management 0 Total n.a. 100 MIGA guarantees (US$m) *IFC's own account only. 58

9 Annex B4 CAS Annex B4 - Summary of Nonlending Services - Bolivia As Of Date 11/24/2003 Product Completion FY Cost (US$000) Audience a Objective b Recent completions Rural Productivity Gov Knowledge Generation Poverty Diagnosis Pub. Dissimination Knowledge Generation National Istitutional Review Bank Knowledge Generation Framework for Participation Gov Knowledge Generation Indigenous Gov Knowledge Generation Policy Diagnostic Bank Knowledge Generation Policy Notes Gov Knowledge Generation Microeconomic Opp Gov Knowledge Generation Heath Study Gov Knowledge Generation Support Rural Development Gov Knowledge Generation Underway CFAA Gov Problem Solving PER Gov Knowledge Generation Natural Gas Gov Knowledge Generation Planned Labor and Informal Markets Gov Knowledge Generation Subnational Government Reform Gov Knowledge Generation City Poverty Strategy Gov Knowledge Generation CEM/Trade Gov Knowledge Generation Social Protection Framework Gov Knowledge Generation Conflict Analysis and Resolution Gov Knowledge Generation a. Government, donor, Bank, public dissemination. b. Knowledge generation, public debate, problem-solving. 59

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11 Annex B5 Bolivia Social Indicators Latest single year Same region/income group Latin Lower- America middle & Carib. income POPULATION Total population, mid-year (millions) ,410.7 Growth rate (% annual average for period) Urban population (% of population) Total fertility rate (births per woman) POVERTY (% of population) National headcount index Urban headcount index Rural headcount index INCOME GNI per capita (US$) , ,390 Consumer price index (1995=100) Food price index (1995=100) INCOME/CONSUMPTION DISTRIBUTION Gini index Lowest quintile (% of income or consumption) Highest quintile (% of income or consumption) SOCIAL INDICATORS Public expenditure Health (% of GDP) Education (% of GNI) Social security and welfare (% of GDP) Net primary school enrollment rate (% of age group) Total Male Female Access to an improved water source (% of population) Total Urban Rural Immunization rate (% under 12 months) Measles DPT Child malnutrition (% under 5 years) Life expectancy at birth (years) Total Male Female Mortality Infant (per thousand live births) Under 5 (per thousand live births) Adult (15-59) Male (per 1,000 population) Female (per 1,000 population) Maternal (per 100,000 live births) Births attended by skilled health staff (%) CAS Annex B5. This table was produced from the CMU LDB system. 12/13/03 Note: 0 or 0.0 means zero or less than half the unit shown. Net enrollment ratios exceeding 100 indicate discrepancies between the estimates of school-age population and reported enrollment data. 61

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13 Annex B6 Bolivia - Key Economic Indicators * Actual Estimate Projected Indicator National accounts (as % of GDP) Gross domestic producta Agriculture Industry Services Total Consumption Gross domestic fixed investment Government investment Private investment Exports (GNFS)b Imports (GNFS) Gross domestic savings Gross national savingsc Memorandum items Gross domestic product (US$ million at current prices) GNP per capita (US$, Atlas method) Real annual growth rates (%, calculated from 1990 prices) Gross domestic product at market prices Gross Domestic Income Real annual per capita growth rates (%, calculated from 1990 prices) Gross domestic product at market prices Total consumption Private consumption Balance of Payments (US$ millions) Exports (GNFS)b Merchandise FOB Imports (GNFS)b Merchandise FOB Resource balance Net current transfers Current account balance Net private foreign direct investment Long-term loans (net) Official Private Other capital (net, incl. errors & ommission Change in reservesd Memorandum items Resource balance (% of GDP) Real annual growth rates ( 1990 prices) Merchandise exports (FOB) Merchandise imports (CIF) (Continued) 63

14 Annex B6 Bolivia - Key Economic Indicators * (Continued) Actual Estimate Projected Indicator Public finance (as % of GDP at market prices)e Current revenues Current expenditures Current account surplus (+) or deficit (-) Capital expenditure Overall balance Foreign financing Monetary indicators M2/GDP Growth of M2 (%) Private sector credit growth / total credit growth (%) Price indices( 1990 =100) Merchandise export price index Merchandise import price index Merchandise terms of trade index Real exchange rate (US$/LCU)f Real interest rates Consumer price index (% change) GDP deflator (% change) * Not include the update of the macroeconomic information by the ongoing discussions between the IMF and the Government. a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Combined public sector f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 64

15 Annex B7 Bolivia - Key Exposure Indicators * Actual Estimate f Projected f Indicator Total debt outstanding and disbursed (TDO) (US$m) a Net disbursements (US$m) a Total debt service (TDS) (US$m) a Debt and debt service indicators (%) TDO/XGS b TDO/GDP TDS/XGS Concessional/TDO IBRD exposure indicators (%) IBRD DS/public DS Preferred creditor DS/public DS (%) c IBRD DS/XGS IBRD TDO (US$m) d Share of IBRD portfolio (%) IDA TDO (US$m) d IFC (US$m) /c Actual Loans g n.a. n.a. n.a. Equity and quasi-equity /e g n.a. n.a. n.a. MIGA MIGA guarantees (US$m) * Not include the update of the macroeconomic information by the ongoing discussions between the IMF and the Government. a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net shortterm capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, IFC, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity, and quasi-equity of both loan and equity types. f. From 2002 the projections are based on data from national sources. g. Data unavailable. 65

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17 Annex B8 Bolivia Operations Portfolio (IBRD/IDA and Grants) As of Date 11/24/2003 Annex B8 Closed Projects 67 IBRD/IDA * Total Disbursed (Active) of which has been repaid 0.30 Total Disbursed (Closed) 1, of which has been repaid Total Disbursed (Active + Closed) 1,789,890, of which has been repaid 454,257, Total Undisbursed (Active) Total Undisbursed (Closed) 0.00 Total Undisbursed (Active + Closed) 289,750,

18 Annex B8 Active Projects Last PSR Supervision Rating Difference Between Expected and Actual Original Amount in US$ Millions Disbursements a/ Project ID Project Name Development Objectives Implementation Progress Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd P BO ABAPO-CAMIRI HIGHWAY S S P BO ENV, INDUSTRY AND MINING P S S P BO HYDROCARBON SECT. SOC. S S P BO INST REF (OLD CIV S) S U P BO LAND ADMINISTRATION S S P BO PART RURAL INVESTMENT PR U U P BO REGULATORY REF. & PRIVAT S U P BO Road Rehab. & Maintenance Pro S S P BO Social Safety Net SAC S S P BO- EDUCATION QUALITY S S P BO- EDUCATION REFORM S S P BO- HEALTH REFORM-APL I S S P BO- INTEGRATED CHILD DEV S S P BO-Health Sector Reform APL II S S P BO-INDIGENOUS PEOPLES DEVT S S P Bol:Decent Infras for Rur Transforma # # P GEF BO-Sustainability of Protected A S S Overall Result

19 Annex B8 CAS Annex B8 (IFC) for Bolivia Bolivia Statement of IFC's Held and Disbursed Portfolio As of 10/31/2003 (In US Dollars Millions) Held Disbursed FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1976/1988/1990/1991/1995/1998 BISA Banco Sol /1992/1994/1996/2000 COMSUR /2001/2003 Caja Los Andes /2001 Central Aguirre Electropaz FIE GENEX Illimani Mercantil-BOL Minera PRODEM TDE S.A TRECO /2001 Telecel Bolivia Total Portfolio: Approvals Pending Commitment Loan Equity Quasi Guara ntee Risk Mgmt Partic 2001 PQB Prodem FFP Total Pending Commitment:

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21 1 Government Policies Area Diagnostic and Strategies Human Development Education Health, Population & Nutrition Social Protection Finance, Private Sector & Infrastructure Financial Sector Energy Telecommunications Education: strong educational reforms impressive in scope and positive in yielding results. Greater improvement is education indicators, especially those related with coverage, but less progress in terms of quality. There are major gaps between different ethnic and income groups. The introduction of the health reform has led to an increase in the coverage of health services and significant progress in health indicators. (i.e. coverage of births attended by trained staff, pre-natal care, coverage of pneumonias in children under five and imp0roved coverage and quality of programs aimed at controlling malaria, Chagas and TB). Equity gaps remain as rural, poor and indigenous have limited access to formal health services. Several important new regulations, aimed at strengthening banks and enhancing supervision, like new capital rules, Impact in terms of credit availability was stronger after the shock of the late 1990s when From Bolivia s Poverty Reduction Strategy Paper (PRSP): Social development of a minimum set of services: (i) accelerated accomplishments in primary and technical education: (ii) accelerated achievements in maternal and child care as well as in controlling communicable diseases; (iii) expanded coverage of drinking water and basic sanitation; (iv) social protection. From Bolivia s Poverty Reduction Strategy Paper (PRSP): Productive Development of micro, small and medium-size enterprises: (i) development of Annex B9 CAS Program Matrix Country Medium Term Development Indicators 23 Short Term 2006 Long Term 2015 No. of Academic educational centers with delay complete primary School school/no. of existing attendance in first cycle of centers primary school (promotion Spending on education/ Total NFPS spending (w/pensions) Percentage of children with low weight at birth Percentage of pneumonias in children under one treated in health services Percentage of households with piped in water (2) Percentage of households with access to basic sanitation (2) Percentage of pregnant women with adequate prenatal control Percentage of childbirths handled institutionally Dwellings with 2 nd cycle of spraying against Chagas disease in endemic areas Implementatio n of Indigenous Development Plan (PDI) No. of culturally oriented micro enterprises in operation Percentage of indigenous population covered by health, education and other basic services - Percentage of municipalities with access to financial services - Ccoverage of rural electrification - Percentage of kilometers in the primary network awarded under concession to 4 th ) Students with at-risk academic performance in language Students with at risk academic performance in mathematics Per capita family income (in 1999 US dollars) Infant mortality rate (per 1,000 live births) Maternal mortality rate (per 100,000 live births) Chagas residential infestation Annex B9 World Bank Performance Major Related Activities of Other (a) WBG Instruments 4 Indicators 5 Donors 6 Self-Eval. OED View Donor Amount Social Safety Structural Credit Project Cr Second Sector Health Reform Program APL II Cr Health Sector Reform Project Cr Education Reform Project Cr Education Quality and Equity Strengthening Integrated Child Development Project Cr Indigenous Peoples Development Project Cr Second Programmatic Structural Adjustment Credit for Decentralization on Project Cr Decentralized Infrastructure for Rural Transportation Project Cr Road Rehabilitation and Maintenance Project Cr Hydrocarbon Sector Social and Environmental Management Capacity building Project U = 0 MS = 0 S = 3 FS = 0 HS = 0 U = 0 MS = 3 S = 7 FS = 0 HS = 1 U = 0 MS = 0 S = 3 FS = 0 HS = 0 U = 1 MS = 0 S = 10 FS = 0 HS = 0 Total Education IDB EU Germany Netherlands Spain Sweden Switzerland Total Health Population & Nutrition IDB EU UNICEF USA Japan Germany Spain Sweden UK Canada Total Social Protection IDB ADC Germany Netherlands UK Total Financial Sector IDB ADC EU USA Germany US$ 127,460 US$ 51,223 US$ 7,194 US$ 4,724 US$ 42,210 US$ 6,083 US$ 15,789 US$ 237 US$ 158,222 US$ 48,710 US$ 24,791 US$ 29,273 US$ 21,273 US$ 17,263 US$ 763 US$ 6,820 US$ 2,518 US$ 3,478 US$ 3,333 US$ 29,812 US$ 100 US$ 25,000 US$ 404 US$ 3,466 US$ 842 US$ 72,606 US$ 2,874 US$ 20,000 US$ 14,040 US$ 18,121 US$ 2,686 1 Diagnostic based on the following documents: Emergency Economic Recovery Project, World Bank, 2003; Country Assistance Strategy World Bank, 1998 and Estrategia Boliviana de Reducción de la Pobreza Draft, UDAPE, August Short Term indicators are the Intermediate Indicators of the PRSP, to be reached by Long Term indicators are the Results and/or Impact Indicators of the PRSP, to be reached by World Bank Group Program Instruments are grouped by sector. 5 Performance Indicators of the projects are grouped by sector. U = Unsatisfactory, MS = Marginally Satisfactory, S = Satisfactory, FS = Fully Satisfactory and HS = Highly Satisfactory 6 Based on the document Recursos de la Cooperación Internacional World Bank, Inter-American Development Bank and Ministry of Finance,

22 Tra nsportation Water & Sanitation Environment, Rural & Social Env ironment Rur al Soci al Macroeconomic Policies, Public Sector & Gender banks stopped borrowing abroad and the economy started to decelerated, leading both to scarce bank liquidity. Private sector negatively affected by the country s economic slowdown during the past few years and the uncertainties associated with political developments. Domestic banking sector has been experiencing an increase in non-performing loans. Growing tensions are apparent among regions, classes, and indigenous /non-indigenous groups. Tensions have intensified over the last decade when stagnant growth, high unemployment and persistent inequality led to increasing public discontent. Economic side: three features stand out a lack f i productive infrastructure; (ii) access to land, water and natural resources; (iii) promotion of productive chain exports; (iv) promotion of local economic development. From Bolivia s Poverty Reduction Strategy Paper (PRSP): Institutionalization of Participation and dialogue mechanisms regarding the BPRS and the pluriannual budget. First phase of the Government s agenda: arrangements - Number of weighing stations - Percentage of primary network that is paved - Budgetary execution of National Roads Service Roadway Fund in millions of dollars - Completion of design of National Water Resources Plan, Master Plans for Basins and national Flood Control Plan - Percentage increase in level of resources allocated to local communities based on SERNAP collections in protected areas - Percentage increase in income levels due to sustainable wildlife management programs - Rate of growth in index of volume of non-industrial agricultural products - Hectares of agricultural lands under cultivation with irrigation (in thousands cumulatively) - Percentage of portfolio of EMFs directed to rural credit in terms of total portfolio of EMFs (urban and rural) - Number of hectares secured (in millions) - Percentage SMEs headed by women with assistance from SAT and PROSAT 72 Cr Abapo Camiri Highway Project Cr Participatory Rural Investment Project Cr Environment, Industry and Mining Project cr National Land Administration Project Cr Regulatory Reform and Privatization Technical Assistance Institutional Reform Project U = 1 MS = 0 S = 5 FS = 0 HS = 0 U = 1 MS = 0 U = 2 MS = 0 S = 4 FS = 0 HS = 0 U = 2 MS = 0 Spain Switzerland Total Private Sector IDB ADC EU Germany Switzerland UK Canada Total Energy Japan Canada ADC Spain Total Telecommuni cation Total Transportatio n IDB ADC EU Germany Total Water & Sanitation IDB ADC EU Germany Sweden Canada Total Environment IDB EU USA Japan Germany Netherlands Spain Denmark Switzerland Canada Total Rural IDB ADC EU USA Japan Germany Netherlands Denmark Switzerland UK Total Social Germany Denmark Switzerland Total Macroeconom ic & Trade US$ 337,298 US$ 12,000 US$ 2,885 US$ 89,044 US$ 61,147 US$ 110 US$ 6,292 US$ 1,587 US$ 9,981 US$ 3,978 US$ 5,949 US$ 3,544 US$ 750 US$ 1,346 US$ 155 US$ 1,293 US$ 0 US$ 105,724 US$ 187,094 US$ 39,851 US$ 4,629 US$ 270,867 US$ 126,777 US$ 20,000 US$ 63,148 US$ 52,577 US$ 2,098 US$ 6,267 US$ 99,403 US$ 35,400 US$ 3,954 US$ 10,422 US$ 4,600 US$ 8,697 US$ 11,536 US$ 219 US$ 24,000 US$ 392 US$ 183 US$ 475,570 US$ 62,282 US$ 100,000 US$ 61,906 US$ 138,889 US$ 5,118 US$ 31,684 US$ 25,955 US$ 28,000 US$ 14,912 US$ 6,824 US$ 21,358 US$ 2,144 US$ 18,134 US$ 1,080

23 Macroeconomi c & Trade Policies Public Sector Governance Gender of progress in poverty reduction and high inequality, a vulnerability of the economy to external shocks, and a precarious fiscal situation. Recently, negative shocks and the resulting slowdown in growth led to drops in per capita income increases in poverty and pressure on the fiscal balance but fall in per capita income was not uniform and has helped fuel the increasing social unrest. There is a high level of informality due high costs of doing business in Bolivia. Even though Bolivia s infrastructure sector has incorporated substantial private participation, Bolivia still needs substantial investment in this sector. High criticism to the low governance at different state levels, the lack of transparency and corruption, and intolerance to the performance of Over the last decade, the government has placed greater emphasis on tracking indicators related to gender, especially with regard to education, health, and the labor market. There is a commitment to decentralization. Government s agenda: Revising the hydrocarbons law, with the aim of raising the effective tax contribution of the oil and gas companies currently operating in Bolivia. Submitting the decision to export natural gas to a public referendum Calling for a Constitutional Assembly to modify the existing And achieve three economic objectives: During the second phase from the end of the Constitutional Assembly to the end of the constitutional term of the President (that is, until August 6, 2007). The government will try to get back on track to meeting its mediumterm objectives through revisions it will make to the existing PRSP From Bolivia s Poverty Reduction Strategy Paper (PRSP): Institutional Sustainability: improve the management capacity and institutional development of execution entities. Fiscal sustainability: funding and the protection of pro-poor expenditure. - Progress of program to give rural women access to literacy, continued school attendance and technical training - Percentage of women with access to Basic Health Insurance - Percentage of women with identity card Cr S = 8 FS = 0 HS = 1 S = 7 FS = 0 HS = 1 Policies IDB ADC Netherlands Sweden UK Total Public Sector IDB UNICEF Germany Netherlands Denmark Sweden Switzerland UK Total Governance IDB ADC UNICEF USA Germany Netherlands Denmark Spain Sweden Switzerland UK Canada Total Gender Denmark Sweden US$ 235,407 US$ 65,000 US$ 132,000 US$ 28,481 US$ 9,156 US$ 770 US$ 136,753 US$ 60,409 US$ 19,000 US$ 19,736 US$ 4,220 US$ 26,232 US$ 1,248 US$ 1,498 US$ 4,410 US$ 134,829 US$ 24,337 US$ 184 US$ 2,250 US$ 58,072 US$ 5,506 US$4,437 US$12,000 US$ 4,646 US$ 13, 298 US$ 947 US$ 630 US$ 8,522 US$ 16,981 US$ 11,634 US$ 5,347 Promote productive development of micro, small and mediumsized enterprises Poverty Reduction Poverty reduction has been slow when reasonable rates of growth occurred (from 1990 to 1997). When growth rates declined ( ), poverty increased Poverty outcomes have also been uneven with From Bolivia s Poverty Reduction Strategy (PRSP): The PRSP is a comprehensive strategy aimed at increasing income-generation opportunities for the poor and improving the No information available U = MS = S = FS = HS = (No information available) U = MS = S = FS = HS = (No information available) Total Poverty Reduction IDB Germany Switzerland US$ 25,578 US$ 19,751 US$ 3,591 US$ 2,236 73

24 significant differences across divisions of rural/urban, highland / lowland and indigenous/ nonindigenous groups. The evolution of the shape of the income distribution and how far the poor are initially located from the poverty line are key factors explaining the meager poverty decline in Bolivia during the 1990s delivery of social services. 74

25 Annex B10 CAS Annex B10 - Bolivia CAS Summary of Development Priorities As Of Date 11/24/2003 Network area Country Major issue b Country performance a priority c Bank priority c Reconciliation of country and Bank priorities d Poverty Reduction & Economic Management Poverty reduction poor inequality high high Economic policy good fiscal deficit high high Public sector good fiscal deficit high high Gender poor not in agenda low moderate other donors Human Development Department Education good inequality high high Health, nutrition & population good inequality high high Social protection good inequality moderate high lack of resources Environmentally & Socially Sustainable Development Rural development fair inequality high moderate Environment poor not in agenda low moderate Social development fair inequality moderate moderate Finance, Private Sector & Infrastructure Financial sector poor private sector high high Private sector fair financial sector moderate moderate Energy & mining fair lack resources low moderate lack of resources Infrastructure poor lack resources moderate low other donors a. Use excellent, good, fair, or poor. b. Indicate principal country-specific problems (e.g., for poverty reduction, rural poverty; for education, female secondary completion; for environment, urban air pollution ). c. To indicate priority, use low, moderate, or high. d. Give explanation, if priorities do not agree; for example, another MDB may have the lead on the issue, or there may be ongoing dialogue. 75

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27 Annex C Annex C: Bolivia CAS Debt Sustainability Analysis A. The Baseline Scenario 1. The baseline scenario assumes a conservative macro framework. Rates of output growth are lower than those employed in the scenario the Government and the IMF have agreed upon under the current IMF s Standby Agreement. In particular, it is assumed that without a gas export project, the real GDP growth converges to 3.6 percent (this figure being the average growth rate for , this period includes economic boom of mid 1990 s and the ongoing economic crisis that started in 1999). 1 This scenario takes into account the programmed World Bank support to Bolivia presented in this document. It is assumed that both the World Bank s and the other creditors graduation of concessional credits starts progressively in Exports and FDI inflows should be less buoyant that in previous scenarios, it is assumed that a gas export project would start in External capital flows are assumed to decrease in 2003 and 2004 recovering modestly afterwards; FDI increases from 2008 due to the gas export project. On the fiscal front, a progressive fiscal adjustment is assumed to take place over the period. The baseline scenario rules out the possibility of a financial crisis or generalized social conflicts. Table C2.1 summarizes the assumptions in the macroeconomic framework. Table C2.1: Key Macro-Indicators Baseline Scenario Actual Projections Indicator Av (Annual percentage change ) Real GDP at market prices CPI inflation (e.o.p) Nominal devaluation (e.o.p.) Exports volume Imports volume (In percent of GDP) Overall public balance Exports of goods and services Imports of goods and services Current account Foreign Direct Investment In the baseline scenario total debt stock indicators do not show an explosive pattern (see Figure C2.1). The stock of debt to GDP deteriorates until 2005, reaching a level of 80.6 percent, 1. In the very short run, despite the decline in domestic demand (mainly due to the difficult social and political situation), exports are leading economic growth: the hydrocarbon sector sustained its performance, agriculture production (mainly due to soybeans) increased and textiles production recovered. In the medium-term, real output will be positively affected by the recovery of Brazil s gas demand (as currently projected). This would increase prospects for increasing gas exports to Brazil. Currently, gas exports stand at only about 13.5 MMm3 per day, while the take or pay clause of the Gas Supply Agreement has already reached 18 MMm3 per day. 77

28 then recovers and reaches 65.8 percent by The net present value (NPV) of debt to GDP deteriorates until 2005, reaching a level of 62 percent and remains constant until Convergence between the NPV debt and the nominal terms debt curves reveal the impact of the graduation and the increase in domestic debt. External debt flow indicators do not show an explosive pattern, either. 3. Domestic debt flow indicators suggest there will be liquidity problems in the mediumterm related to servicing domestic debt. Despite the primary balance adjustment, the shock debt indicators deteriorate dramatically from 2009 due to the increase of domestic debt service. This behavior reflects the recent increases in domestic debt, the shortage of external financing and the uneven composition of the domestic debt (concentrated in very short term and long term instruments) a significant amount of domestic have to be amortized in the very short term; by 2009 long term debt instruments (AFP bonds) start to be amortized, thus increasing debt service payments between 2009 to The pattern of domestic debt indicates that to achieve domestic debt sustainability the Government needs to find additional grants and concessional credits to substitute domestic financing (Scenario 5). To reduce domestic debt service payments in , the Government should find alternative sources for financing the cost of the pension reform and find ways to diversify its total public debt. Figure C2.1: Bolivia Baseline Scenario: Key Indicators of Fiscal Sustainability Total Debt Indicators External Debt Indicators Domestic Debt Indicators % of GDP % of total public revenues % of GDP % of exports or revenues % of GDP % of total public revenues Year Nominal stock of debt to GDP (LHS) NPV of debt to GDP (LHS) Debt service to total revenues (RHS) Year Nominal stock of debt to GDP (LHS) NPV of external debt to GDP (LHS) External debt service to exports (RHS) External debt service to revenues (RHS) Note: The public sector corresponds to the consolidated combined public sector operations Year Nominal stock of domestic debt to GDP (LHS) NPV of domestic debt to GDP (LHS) Domestic debt service to revenues (RHS) 0 B. Alternative Economic Performance and Fiscal Adjustment (Scenarios 2, 3 and 4) 4. Scenario 2 differs from the baseline only in the better fiscal adjustment of the Government, which aggressively reacts to lower economic performance by reducing its 78

29 expenditures and by increasing tax revenues 2. Given the current social and political situation, the fiscal adjustment assumed by this alternative scenario might be very difficult to implement. To assess how fiscal sustainability is affected by lower economic growth rates and less optimistic export prospects, Scenario 3 assumes more pessimistic GDP growth since there is no implementation of any project similar to the liquid natural gas (LNG) project. The FDI prospects are lower, export growth is significantly reduced. Other external financing assumptions are the baseline s. Fiscal adjustment assumptions for Scenario 3 are those from the baseline. Scenario 4 differs from the Scenario 3 in the better fiscal adjustment of the Government, which aggressively reacts to lower economic performance. 5. The outcome of alternative scenarios is presented in Figure C2.2 and Tables C2.2 to C2.5. Results from Scenario 2 show that if an aggressive fiscal adjustment takes place, debt sustainability is achieved; given the current social and political situation this fiscal adjustment might be difficult to implement. As compared to the baseline, Scenario 3 shows that all debt indicators deteriorate, attesting that if low economic performance is assumed, debt sustainability is significantly affected. However, fiscal sustainability in the low economic performance scenario can improve significantly if the Government reacts to lower growth rates by reducing current expenditures and/or increasing fiscal revenues (Scenario 4). 85 Figure C2.2: Alternative Economic Performance and Degree of Fiscal Adjustment Key Indicators of Debt Sustainability Nominal Debt to GDP 70 NPV of Debt to GDP 45 Debt service to Public Revenues % of GDP % of GDP 55 % of total revenues Year Baseline scenario With LNG and agresive fiscal ajustment Without LNG and partial fiscal ajustment Without LNG and agresive fiscal ajustment Year Baseline scenario With LNG and agresive fiscal ajustment Without LNG and partial fiscal ajustment Without LNG and agresive fiscal ajustment Year Baseline scenario With LNG and agresive fiscal ajustment Without LNG and partial fiscal ajustment Without LNG and agresive fiscal ajustment C. Scenario with No Domestic Financing and only External Financing (Scenario 5) 6. An alternative scenario, based on the base case, is considered to illustrate the relative contribution of the build-up of internal debt to Bolivia s debt problem. To do so, the base case is 2. Starting from the baseline fiscal adjustment assumption, Scenario 2 assumes that current expenditures are reduced by 0.25 percent of GDP per year from 2004 to 2015 and that tax revenues increase by 0.25 percent of GDP per year from 2005 to

30 compared with a hypothetical case which includes no internal financing with the entire debt financed by an unidentified external creditor under conditions that would prevail under a blend of concessionary and nonconcessionary financing. 3 Figure C2.3 compares the results of this scenario with those of the baseline. In this scenario, stock and flow indicators are better than in the base case and the nominal value and NPV of debt to GDP are reduced significantly in the medium term. The debt service to public revenues also decreases. This reflects the impact of more expensive domestic debt and highlights the danger of the government turning to more accessible but more expensive domestic debt to finance the fiscal deficit. 85 Nominal Debt to GDP Figure C2.3: No Domestic Financing Scenario Key Indicators of Debt Sustainability 85 NPV of Debt to GDP 45 Debt service to Public Revenues % of GDP % of GDP % of total revenues Year Baseline scenario No domestic financing scenario Year Baseline scenario No domestic financing scenario Year Baseline scenario No domestic financing scenario D. Scenarios of Financial Crisis and Insufficient Fiscal Adjustment (Scenarios 6 and 7) 7. Two critical scenarios were simulated to evaluate the effects of two risks in the Bolivian economy: (i) the possible inability to attain a progressive fiscal adjustment (Scenario 6); and (ii) the effects of a financial crisis triggered say by further political instability and/or increased social unrest (Scenario 7). 4 Figure C2.4 compares the results of these two scenarios with those of the baseline. Results of Scenario 6 do not show fiscal sustainability: the domestic debt service 3. The assumed conditions in scenario 5 are: 10 years of maturity, 2 years of grace and an interest rate of 4 percent. 4. Starting from the assumptions of Scenario 3 (without gas), Scenario 6 assumes a permanent increase in current expenditures of 1 percent GDP from 2004 onwards; the long term growth rate of real output is reduced by 0.5 percentage points. External capital flows, especially of FDI and export performance are reduced as well. The baseline-scenario-levels of external financing are maintained, this implies that public debt growth is explained essentially by an increase in domestic debt. Scenario 7 starts from the assumptions of Scenario 3 as well and assumes that a financial crisis takes place during The total fiscal cost of the financial crisis is assumed to amount 5 percent of GDP and is fully supported by the Government of Bolivia (GOB) during 2004 and is financed by domestic debt. 80

31 becomes such a heavy burden for fiscal accounts that by 2008 the ratio of nominal stock of debt to GDP enters in an unstable exploding path. Due to liquidity and solvency difficulties in the medium-term, this scenario is clearly fiscal unsustainable. Results of Scenario 7 lie between the results of Scenarios 6 and 3; they do not show fiscal sustainability either. Similarly, debt service starts to increase rapidly from 2009 onwards. As a result, the ratio of the stock debt to GDP remains constant at about 70 percent of GDP (reflecting the relative increase of debt in commercial terms domestic debt, relative to debt on concessional terms). Figure C2.4: Critical Scenarios of Financial Crisis and Fiscal Slippage Key Indicators of Debt Sustainability 120 Nominal Debt to GDP 120 NPV of Debt to GDP 70 Debt service to Public Revenues % of GDP 60 % of GDP 60 % of total revenues Year Baseline scenario Financial crisis scenario Extreme scenario Year Baseline scenario Financial crisis scenario Extreme scenario Year Baseline scenario Financial crisis scenario Extreme scenario 81

32 Table C2.2: Macroeconomic Framework and Key Debt Indicators (Base Scenario) Bolivia - Medium and Long Term Macroeconomic Framework Actual Projections Indicator (Annual percentage change) Output and Prices Real GDP at market prices CPI (end of period) Nominal exchange rate (e.o.p.) (In percent of GDP) National Accounts Gross domestic investment Gross national savings Public Sector Accounts Revenues, excluding grants Grants Expenditures Overall balance External financing (net) Domestic financing (net) Balance of Payments Exports of goods and services Imports of goods and services Current account Gross official reserves (as month of imports) (Annual percentage change) Exports volume Imports volume Term of trade Bolivia - Key Debt Indicators (Pecentage) Actual Projections Indicator Total public debt indicators Nominal stock of debt to GDP (LHS) NPV of debt to GDP (LHS) Debt service to total revenues (RHS) External public debt indicators Nominal stock of debt to GDP (LHS) NPV of external debt to GDP (LHS) External debt service to exports (RHS) External debt service to revenues (RHS) Domestic public debt Nominal stock of domestic debt to GDP (LHS) NPV of domestic debt to GDP (LHS) Domestic debt service to revenues (RHS) Amortization of domestic debt to GDP

33 Annex C2.3 : Macroeconomic Framework and Key Debt Indicators (Scenario 2) Bolivia - Medium and Long Term Macroeconomic Framework Actual Projections Indicator (Annual percentage change) Output and Prices Real GDP at market prices CPI (end of period) Nominal exchange rate (e.o.p.) (In percent of GDP) National Accounts Gross domestic investment Gross national savings Public Sector Accounts Revenues, excluding grants Grants Expenditures Overall balance External financing (net) Domestic financing (net) Balance of Payments Exports of goods and services Imports of goods and services Current account Gross official reserves (as month of imports) (Annual percentage change) Exports volume Imports volume Term of trade Bolivia - Key Debt Indicators (Pecentage) Actual Projections Indicator Total public debt indicators Nominal stock of debt to GDP (LHS) NPV of debt to GDP (LHS) Debt service to total revenues (RHS) External public debt indicators Nominal stock of debt to GDP (LHS) NPV of external debt to GDP (LHS) External debt service to exports (RHS) External debt service to revenues (RHS) Domestic public debt Nominal stock of domestic debt to GDP (LHS) NPV of domestic debt to GDP (LHS) Domestic debt service to revenues (RHS) Amortization of domestic debt to GDP

34 Annex C2.4 : Macroeconomic Framework and Key Debt Indicators (Scenario 3) Bolivia - Medium and Long Term Macroeconomic Framework Actual Projections Indicator (Annual percentage change) Output and Prices Real GDP at market prices CPI (end of period) Nominal exchange rate (e.o.p.) (In percent of GDP) National Accounts Gross domestic investment Gross national savings Public Sector Accounts Revenues, excluding grants Grants Expenditures Overall balance External financing (net) Domestic financing (net) Balance of Payments Exports of goods and services Imports of goods and services Current account Gross official reserves (as month of imports) (Annual percentage change) Exports volume Imports volume Term of trade Bolivia - Key Debt Indicators (Pecentage) Actual Projections Indicator Total public debt indicators Nominal stock of debt to GDP (LHS) NPV of debt to GDP (LHS) Debt service to total revenues (RHS) External public debt indicators Nominal stock of debt to GDP (LHS) NPV of external debt to GDP (LHS) External debt service to exports (RHS) External debt service to revenues (RHS) Domestic public debt Nominal stock of domestic debt to GDP (LHS) NPV of domestic debt to GDP (LHS) Domestic debt service to revenues (RHS) Amortization of domestic debt to GDP

35 Annex CA2.5 : Macroeconomic Framework and Key Debt Indicators (Scenario 4) Bolivia - Medium and Long Term Macroeconomic Framework Actual Projections Indicator (Annual percentage change) Output and Prices Real GDP at market prices CPI (end of period) Nominal exchange rate (e.o.p.) (In percent of GDP) National Accounts Gross domestic investment Gross national savings Public Sector Accounts Revenues, excluding grants Grants Expenditures Overall balance External financing (net) Domestic financing (net) Balance of Payments Exports of goods and services Imports of goods and services Current account Gross official reserves (as month of imports) (Annual percentage change) Exports volume Imports volume Term of trade Bolivia - Key Debt Indicators (Pecentage) Actual Projections Indicator Total public debt indicators Nominal stock of debt to GDP (LHS) NPV of debt to GDP (LHS) Debt service to total revenues (RHS) External public debt indicators Nominal stock of debt to GDP (LHS) NPV of external debt to GDP (LHS) External debt service to exports (RHS) External debt service to revenues (RHS) Domestic public debt Nominal stock of domestic debt to GDP (LHS) NPV of domestic debt to GDP (LHS) Domestic debt service to revenues (RHS) Amortization of domestic debt to GDP

36 Annex CA2.6 : Macroeconomic Framework and Key Debt Indicators (Scenario 5) Bolivia - Medium and Long Term Macroeconomic Framework Actual Projections Indicator (Annual percentage change) Output and Prices Real GDP at market prices CPI (end of period) Nominal exchange rate (e.o.p.) (In percent of GDP) National Accounts Gross domestic investment Gross national savings Public Sector Accounts Revenues, excluding grants Grants Expenditures Overall balance External financing (net) Domestic financing (net) Balance of Payments Exports of goods and services Imports of goods and services Current account Gross official reserves (as month of imports) (Annual percentage change) Exports volume Imports volume Term of trade Bolivia - Key Debt Indicators (Pecentage) Actual Projections Indicator Total public debt indicators Nominal stock of debt to GDP (LHS) NPV of debt to GDP (LHS) Debt service to total revenues (RHS) External public debt indicators Nominal stock of debt to GDP (LHS) NPV of external debt to GDP (LHS) External debt service to exports (RHS) External debt service to revenues (RHS) Domestic public debt Nominal stock of domestic debt to GDP (LHS) NPV of domestic debt to GDP (LHS) Domestic debt service to revenues (RHS) Amortization of domestic debt to GDP

37 Annex CA2.7 : Macroeconomic Framework and Key Debt Indicators (Scenario 6) Bolivia - Medium and Long Term Macroeconomic Framework Actual Projections Indicator (Annual percentage change) Output and Prices Real GDP at market prices CPI (end of period) Nominal exchange rate (e.o.p.) (In percent of GDP) National Accounts Gross domestic investment Gross national savings Public Sector Accounts Revenues, excluding grants Grants Expenditures Overall balance External financing (net) Domestic financing (net) Balance of Payments Exports of goods and services Imports of goods and services Current account Gross official reserves (as month of imports) (Annual percentage change) Exports volume Imports volume Term of trade Bolivia - Key Debt Indicators (Pecentage) Actual Projections Indicator Total public debt indicators Nominal stock of debt to GDP (LHS) NPV of debt to GDP (LHS) Debt service to total revenues (RHS) External public debt indicators Nominal stock of debt to GDP (LHS) NPV of external debt to GDP (LHS) External debt service to exports (RHS) External debt service to revenues (RHS) Domestic public debt Nominal stock of domestic debt to GDP (LHS) NPV of domestic debt to GDP (LHS) Domestic debt service to revenues (RHS) Amortization of domestic debt to GDP

38 Annex CA2.8 : Macroeconomic Framework and Key Debt Indicators (Scenario 7) Bolivia - Medium and Long Term Macroeconomic Framework Actual Projections Indicator (Annual percentage change) Output and Prices Real GDP at market prices CPI (end of period) Nominal exchange rate (e.o.p.) (In percent of GDP) National Accounts Gross domestic investment Gross national savings Public Sector Accounts Revenues, excluding grants Grants Expenditures Overall balance External financing (net) Domestic financing (net) Balance of Payments Exports of goods and services Imports of goods and services Current account Gross official reserves (as month of imports) (Annual percentage change) Exports volume Imports volume Term of trade Bolivia - Key Debt Indicators (Pecentage) Actual Projections Indicator Total public debt indicators Nominal stock of debt to GDP (LHS) NPV of debt to GDP (LHS) Debt service to total revenues (RHS) External public debt indicators Nominal stock of debt to GDP (LHS) NPV of external debt to GDP (LHS) External debt service to exports (RHS) External debt service to revenues (RHS) Domestic public debt Nominal stock of domestic debt to GDP (LHS) NPV of domestic debt to GDP (LHS) Domestic debt service to revenues (RHS) Amortization of domestic debt to GDP

39 Annex D: Bolivia CAS Additional Information on existing portfolio 89 Annex D Name Credit Loan Amount Approval Date Closing Date Undisbursed Amount as of 10/31/2003 Description Social Safety Net Structural Adjustment Credit Project IDA $35,000,000 June 17, 2003 June 30, 2004 $9,948,230 The credit supports the Government program of Fiscal Adjustment and provision of vital social safety net services by helping close the financial gap in 2003, contain erosion in social outcomes by protecting the budgets of nine key programs, strengthening social sector reforms and providing technical support in this programs. Second Sector Health Reform Program Project (APL) IDA $35,000,000 June 28, 2001 June 30, 2006 $30,247, This second phase of the health sector Reform Adaptable Program Loan (APL2) continues a results driven approach to invest in the reduction of infant mortality in Bolivia focusing in coverage and quality of health service network of the Basic Health Sector Reform Project Education Quality and Equity Strengthening Project Education Reform Project Integrated Child Development Project Decentralized Infrastructure for Rural Transformation Project Road Rehabilitation and Maintenance Project National Land Administration Project (Supplemental Credit) Indigenous Peoples Development Project Health Insurance program IDA $25,000,000 June 15, 1999 December 31, 2003 $2,924, This program seeks to increase coverage and qualit y of health services focusing on Immunizations, Management of Childhood illness and Mother-Baby Package IDA $75,000,000 June 16, 1998 December 31, 2003 $10,165, This Project complements an earlier Education Reform Program by providing support on infrastructure and educational process improvements; strengthening the participation of parents, teachers and other institutions with different procedures of this reform IDA $40,000,000 August 5, 1994 July 30, 2004 $5,503, The Education Reform Project supports a sector reform designated to improve the quality and equity of primary education by strengthening the government institutions ability to set the policies and guidelines, and improve the capacity of the public education system to deliver educational services effectively and efficiently IDA $30,586, June 29, 1993 December 31, 2003 $8,094, This project supports the Government's Ten -Year Action Plan for Children and Women; which will contribute toward poverty alleviation and human capital development objectives by expanding coverage and improving quality of child development programs in poor urban and peri-urban areas of Bolivian cities IDA $20,000,000 June 17, 2003 December 31, 2007 $20,000,000 Improving and delivering infrastructure services for rural areas especially regarding Electricity and ICT; focusing on income and employment generation, productive and social uses of this infrastructure delivered by private sector mechanisms IDA $77,000,000 April 16, 2002 December 31, 2007 $68,186, This Project will improve access, and transit conditions of key segments of the national and secondary road network, also, will strengthen the capacity to manage road assets by the Road National Service IDA $6,000,000 September 18, 2001 June 30, 2004 $3,885, This supplemental financing will prepare and consolidate the land administration legal and institutional framework, and also complete land titling and other procedures of smallholders in eastern Bolivia IDA $5,000,000 February 14, 2001 December 31, 2004 $4,391, The objective of this Project is to learn how culturally - based productive initiatives of indigenous communities can contribute to income generation and poverty reduction.

40 Name Credit Loan Amount Approval Date Closing Date Undisbursed Amount as of 10/31/2003 Description Hydrocarbon Sector Social and Environmental Management Capacity Building IDA $4,800,000 May 30, 2000 December 31, 2003 $2,532, Improving the social and environmental management of the hydrocarbon sector exploration, production and transport activities, it's the main objective of this Project. It will also support technical assistance for the regulation and mitigation of social and environmental impacts of hydrocarbon activities. Project Abapo - Camiri Highway Project IDA $88,000,000 June 3, 1999 June 30, 2004 $49,661, This project will improve the transports condition on the east - south Departments of Bolivia, creating a strategic transport Regulatory Reform and Privatization Technical Assistance project Participatory Rural Investment Project Environment, Industry and Mining Project Institutional Reform Project Second Programmatic Structural Adjustment Credit for Decentralization Project corridor to Argentina and Paraguay IDA $20,000,000 June 30, 1999 September 30, 2004 $6,446, Strengthening the financial sector, enhancing the legal and regulatory framework for infrastructure and business, and promoting the improved provision of goods and services are the main objectives of this program of technical assistance IDA $62,800,000 May 12, 1998 June 30, 2004 $39,658, Promoting economic development of rural municipalities by making sustainable investments that are based on local demands identified thought a participatory planning processes, is the main objective of this project that assists municipalities and communities directly IDA $11,000,000 December 21, 1995 December 31, 2003 $4,262,468 The Environment Industry and Mining Project will support the implementation of a regulatory framework that assures that private, mining and industrial act ivities grow in a more environmentally friendly fashion IDA $32,000,000 June 15, 1999 June 30, 2005 $20,667, The Institutional Reform Project seeks to improve the effectiveness, efficiency and transparency of the Bolivian Administration which will help on the implementation of economic and social development programs IDA $25,000,000 June 17, 2003 January 31,2004 $ 0 The PSAC Program supports the Government in its efforts to improve the delivery of public services to the poor and increase the efficiency, transparency and accountability of Bolivia s decentralized government system. Total Undisbursed Amount $286,576, Undisbursements available until $27,980, December 31, 2003 Undisbursements available until June $103,153, ,2004 Undisbursements available until $16,341, December 31, 2004 Undisbursements available until $ , December 31,

41 Annex E ANNEX E: BOLIVIA CAS - INTERNATIONAL COOPERATION ASSISTANCE 1. Basic information about the nature of the entire portfolio of the International Cooperation was collected as part of the CAS preparation, through a joint effort of the World Bank, IDB and the Government. This information is based on an extensive canvassing of the main agencies working in Bolivia, taking into account their plans for the period Some of the important findings from that study are as follows: External assistance is of critical importance to overall public finances. 2. External assistance reached roughly 10 percent of GDP last year and financed roughly one third of the public budget. The total is more that all public investment. The Government resorted to increased financing from CAF in 2002 to finance part of the fiscal deficit. Disbursements from all sources in 2002 reached US$784 million compared to an average of US$572 million in the previous years. CAF disbursements in 2002 were US$278 million, roughly US$200 million more than their average of the previous three years. The levels of assistance provided by different agencies are presented below in Table E.1. There are roughly US$1.6 billion in undisbursed resources in existing projects and roughly US$800 million a year projected in new flows. Table E.1. Recent Disbursements of the International Cooperation Agency Average Disbursements Estimated Disbursements 2002 Multilaterals World Bank IDB European Union Andean Dev. Corp (CAF) UNICEF Others Bilaterals USA Japan Germany Netherlands Spain Denmark Sweden Switzerland UK Canada Others Total

42 3. The projected new flows represent a significant increase over what Bolivia received over the , which was around US$572 million. This increase is largely due to increases of the multilaterals, rather than the bilaterals. Table E.2 shows how the current stock of projects are distributed and where new resources are expected to be allocated. There is considerable inertia in the system. The planned allocation of resources for the period looks very similar to the actual allocation of resources that were made between 1998 and 2001 Table E.2. Undisbursed Balances in Existing Projects and Estimated Disbursements in New Projects Thematic Area Undisbursed amount Structure (percent) Estimated New Disbursements Structure (percent) Total Resources Structure (percent) Inst Strengthening 228, , , Education 77, , , Health 166, , , Transport 273, , , Rural Dev 299, , , Water and sanitation 127, , , Environment 62, , , Pensions, financial 29, , , system Urban Infrastructure 44, , , Support to General 28, , , Econ Program Alternative Dev 68, , , Prod. & 7, , , Competitiveness Total 1,415,097 1,682,644 3,097,741 Other agencies 152,931 21, ,366 Ajustment for Japan, Spain, Germany, & Sweden 0 218, ,669 Total Estimated Disbursements 1,568,028 1,922,748 3,490, Table E.3 contrasts planned expenditures over the period with actual disbursements over the period. 5. The planned allocations represent the aggregation of decisions taken independently by the different agencies. Because the original PRSP did not specify detailed priorities, virtually all donor activities were considered to be consistent with the strategy. Thus, no reorientation of the portfolio to the PRSP took place between 2001 and Some initial observations on planned expenditures over the period that are worth noting include the following. The amount projected to be spent in education in the future ( ) is less than in the past and is lower (at 6 percent of total external resources) than one might expect given its importance. A high percentage of past and future external resources are spent on institutional strengthening (roughly 17 percent or projected for , some US$500 million). One could certainly question whether there has been sufficient progress to show for the amount spent (largely in paying salaries). Relatively small amounts are projected for 92

43 productivity and competitiveness (3.2 percent of total assistance), despite the emphasis on this topic in the government's revised PRSP. Table E.3. Structure of Past and Estimated Future Disbursements of the International Cooperation Thematic Area Undisbursed amount Structure (percent) Estimated New Disbursements Structure (percent) Total Resources Structure (percent) Inst 228, , , Strengthening Education 77, , , Health 166, , , Transport 273, , , Rural Dev 299, , , Water and 127, , , sanitation Environment 62, , , Pensions, 29, , , financial system Urban 44, , , Infrastructure Support to 28, , , General Econ Program Alternative Dev 68, , , Prod. & 7, , , Competitiveness Total 1,415,097 1,682,644 3,097,741 Other agencies 152,931 21, ,366 Ajustment for 0 218, ,669 Japan, Spain, Germany, & Sweden Total Estimated Disbursements 1,568,028 1,922,748 3,490,776 Assistance provided by the International Cooperation is scattered across too many projects. 7. The detailed analysis of external assistance revealed excessive dispersion of effort. Over there were 633 agreements signed between the Government and the International Cooperation that translated into over 1700 development projects. The distribution of agreements by thematic area is provided in TableE.4. 93

44 Table E.4. Distribution of Agreements between the Government and International Cooperation, by thematic area Thematic Area Number of Separate Agreements Inst Strengthening 157 Education 53 Health 60 Transport 28 Rural Development 143 Water and sanitation 37 Environment 36 Pensions, financial system 24 Urban infrastructure 11 Support to general 46 economic program Alternative development 7 Productivity and 31 competitiveness Total The sheer numbers of projects complicates greatly the task of generating a results orientation. Even if one were to assume that each project has only one objective (which typically is not the case), this would imply that the Government is trying to achieve at least 1,700 objectives. Obviously, this is infeasible. 94

45 Annex F: Bolivia, Seventeen years of Structural Reforms, Year Policy Main Objective Achievements Pending Challenges/Shortfalls World Bank Credits to support DS 21060: Stabilization and Structural Reform of the Economy Opening the economy. Tax Reform: Increase tax revenues Financial Reform: regulation, supervision and support for the banking sector. Macroeconomic stability and economic growth. Low inflation rates and moderate economic growth. Better control of fiscal accounts. Price (exchange rates, salaries, interest rates, etc.) liberalization and removal of relative price imbalances. Establishment of free hiring of personnel Unification of customs tariffs (20%, reduced to 10% in 1990) as well as removal of customs barriers. Dismissal of capital controls. Reintroduction of operations in dollars on the financial market. Since 1986, restructuring of the external debt. From the mid 1980 s to early 1990 s, the negative social impacts were not fully mitigated. The restructuring of public enterprises was only partially implemented, they were not able to recover financially. Later many of the public enterprises entered into the capitalization process. Improved Increase in international trade volumes. Informality has not decreased. competitiveness. Increase and diversification of exports. Simplified tax procedures. Customs tariffs reduction, that further underwent a reduction in favor of the import of capital goods. Adequate functioning of Government finances. Improved functioning of the financial system. Increase in tax revenues. Simplification of the fiscal system. Enlargement of the tax payers basis through special regimes. Revision of the 1928 Bank Law. Designation of the Superintendent of Banks, independent from the BCB that supervises and regulates the sector. Launching a growth process in terms of bank supervision in Bolivia SAFCO Law: Efficient use of Creation of a modern framework for Administratio n and control public resources. management and monitoring of public administration. of government resources. Creation of a governmental expenses control unit. The various efforts to promote exports have not been particularly successful. Fiscal administration needs further improvement. Corruption and efficiency are still issues. Special tax regimes have not been properly applied and have been abused. The tax revenues have turned out to be less than expected. Key reforms of the financial system, like the independence of the BCB as well as the restructuring of the national bank system, were late in being implemented. SAFCO procedures were slow, have been incomplete and unevenly applied. The implementation of the law is incomplete and varies across the government. Public administration has yet to install a results orientation. Investment / Adjustment Reconstruction Import Credit Project Credit / Oct Dec Emergency Social Fund Project / Credit / Nov Jan Second Reconstruction Import Credit / Credit /Mar Dec Second Emergency Social Fund Project / Credit / Jul.1988 Oct 1991 Reconstruction Import Credit Project / Credit / Oct Dec Second Reconstruction Import Credit / Credit / Mar Dec Export Corridors Project / Credit / Feb Jun Agro-Export Development Project / Credit / Nov.1992 Dec Public Financial Management Operation / Credit / Dec Jun Economic Management Strengthening Operation / Credit / May Jun Second Public Financial Management 1 This includes projects that were undertaken right after the reform as well as subsequent projects that supported the overall reform objectives. 95

46 Year Policy Main Objective Achievements Pending Challenges/Shortfalls World Bank Credits to support 1 Investment Investment Law: Rules for increase. domestic and foreign investment. Hydrocarbon Law: legal framework for the development and exploration of hydrocarbon fields. Better use of resources. Development of the country s energy base Mining Code. Dynamism of the mining sector Privatization Law: selling of public enterprises. Improve and redistribute fiscal resources. Improvement of the legal framework for investors. Definition of the principle of equality between national and foreign companies. Definition of joint investment under the shared risk modality. Bilateral and multilateral agreements establishing guarantees for foreign investments. Introduction of shared risk contracts for exploration and exploitation. More flexibility of foreign investment participation is introduced. Investment increase in the oil sector. The public expenditure apparatus is still cumbersome. Resources are not assigned based on development objectives. Legislation on capital repatriation is incomplete. The reform and modernization of the Trade Code is still pending. Still complaints about stability in application of legal framework, which adversely affects investment. Following this early Hydrocarbons Law, production din not increase and FDI levels decreased. Definition of a legal framework for signing A substantive growth of private investment shared risk contracts with the national company. for this sector has not been attained. However Simplified procedures and legal security. this is largely due to low prices. Definition of a fiscal regime for the mining sector in Transfer of small public enterprises to the With this Privatization Law, there were private sector. complaints about the transparency of the Investment of the modest resources obtained in process. social areas. FDI could not be significantly increased. Over the period, annual FDI was US$ 43 millions and US$ 99 millions in Environment Protect and Significant improve in the number of protected The social and environmental impacts on big Law No preserve the areas. investments (in particular those based on the environment and Some progress on mitigating negative impacts explotation of natural resources) need to be natural resources. Promote sustainable development of oil/gas production. better addressed. Effective protection of Bolivia s megabiodiversity remains to be achieved. Investment / Adjustment Operation / Credit / Dec Dec Financial Decentralization and Accountability Project / Credit N-033 AIF / Jun Mar-2003 Private Enterprise Development Project / Credit / Jun Jun Vuelta Grande Recycling Project / Credit / Dec Dec Hydrocarbon Sector Social and Environmental Management Capacity Building Project (LIL) / Credit / Feb Dec Mining Sector Rehabilitation Project / Credit /Jun Jun Power Rehabilitation Project / Credit / Jan Dec Major Cities Water and Sewerage Rehabilitation Project / Credit / Sept.1991 Dec.1997 Eastern Lowlands: Natural Resource Management and Agricultural Production Project / Credit / Jan Dec Environmental Technical Assistance Project / Credit / Jun Jun Environment, Industry and Mining Project / Credit / Jan Jun Sustainability of the National System of Protected Areas Program / (GEF) / Mar Jul

47 Year Policy Main Objective Achievements Pending Challenges/Shortfalls World Bank Credits to support General Banking Law: regulation of the financial system Capitalization Law: selling of shares of public enterprises. Popular Participation Law: redistribution of income. Strengthening of the financial system. Better distribution of fiscal resources, generating higher domestic savings. Greater social participation in the definition of public policies. Promote local development. Increase competitiveness in rural areas. Improve the delivery of basic services to rural areas. A more reliable financial system. Consolidation of the financial regulatory system as well a drafting of norms for equity adequacy and the prohibition of related credits. Introduction of the concept of multibanking. Dissolution of the National Bank. Improvement of supervision systems and strengthening of financial entities. Promotion of foreign banks entering the national market. Conversion of public companies into corporations, followed by their transfer to private people. FDI growth (from US$ 90 million in 1994 to US$ 1014 million in 2000). Development of the hydrocarbon, telecommunication and electricity sectors. Better allocation of public resources. Transfer of Treasury s resources to forgotten regions. Transfer of competencies of public investment to municipal governments. Transfer of some tax revenues to municipalities for them to generate own resources. Creation of citizens participation and social control mechanisms. The BCB independence was not obtained under this law. This was attained only in 1995 through the BCB Law. The financial system could not be completely strengthened, and various financial institutions went bankrupt. Capitalized enterprises did not always fully comply with the investment contracts they subscribed. The increase in fiscal revenues has been lower than expected. The air and rail transport service coverage did not increase significantly. After the passage of the PPL, some municipalities did not have sufficient resources to carry out the tasks transferred to them. Municipalities encounter technical problems to properly apply the new law. The citizens participation and social control mechanism have not worked well. Some municipalities took out unreasonably high debts; debt control mechanism are not effective. Competencies of different levels of government overlap. Investment / Adjustment Financial Sector Adjustment / Credit , , , / Sept.1988 Dec Structural Adjustment Program / Credit / Dec.1991 Dec Regulatory and Capitalization Technical Assistance Project / Credit / Jan Dec Hydrocarbon Sector Reform and Capitalization Technical Assistance Project / Credit / Dec Dec Power Sector Reform Technical Assistance Project / Credit / Jan.1997 Jun.1999 Financial Decentralization and Accountability Project / Credit N-033 AIF / Jun Mar-2003 Regulatory and Privatization Technical Assistance Project / Credit / Feb Mar Capitalization Program Adjustment Credit / Credit , , , / Dec.1995 Feb Regulatory Reform Sector Adjustment Credit / Credit , /Dec.1998 Sept La Paz Municipal Development / Credit / Jan Oct Social Investment Fund / Credit / Dec.1990 Jun.1995 Agricultural Technology Development Project / Credit / Feb Oct Social Investment Fund II / Credit / May 1994 Dec Municipal Sector Development Project / Credit / Aug Dec.1999 Rural Communities Development Project / Credit / Dec.1995 Aug.1999 Rural Water and Sanitation Project / Credit / Oct Jun

48 Year Policy Main Objective Achievements Pending Challenges/Shortfalls World Bank Credits to support 1 Educational Reform Law: improve quality and coverage of education. Tax reform. Constitutional Reform and Reform of the Judiciary Better coverage and quality of public education. Establishment of primary education taught in indigenous languages Increase in the number of educational institutions and educational coverage. Increase of fiscal Perfecting of the fiscal system. revenues. Increase in fiscal revenues. Modifications to the electoral system, with special emphasis on the election of uninominal candidates. Indigenous People Bill of Right. Setting the bases for the judicial power reform to be realized in 1997, with the inclusion of the Magistracy Council and the Constitutional Tribunal. Creation of the Ombudsman Office. Reform of the Penal Procedure Code in 2002, simplifying procedures. The implementation of the reform was slow in its early years. School reform has only reached the primary level. Still problems with school quality. Serous problems still remain at the university level. Increased collection was insufficient to cover fiscal cost of accompanying reforms. The reform has been unable to supplant special regimes or reduce informality. Fiscal administration has not been reformed and is still subject to of corruption and inefficiency. Some large tax payers owe substantial amounts to the state. Modifications to the electoral system did not spawn a better relationship between the State and the civil society. The Judicial power has not been able to escape political pressure. Neither the Magistracy Council nor the Constitutional Tribunal have been able to function properly. The penal procedure code has not yet been fully applied due to institutional limitations. Investment / Adjustment Participatory Rural Investment Project / Credit / Dec Jun Hydrocarbon Sector Social and Environmental Management Capacity Building Project (LIL) / Credit / Feb Dec Indigenous Peoples Development Project / Credit / Apr.2001 Dec Decentralized Energy, Information and Communications Technology for Rural Transformation / Credit / Dec Dec Decentralization Programmatic Structural Adjustment Credit / Credit / May Jun Second Programmatic Structural Adjustment Credit for Decentralization PSAC II / Credit / Jun Jan Education Reform Project / Credit / Apr Jan Education Quality and equity Strengthening Project / Credit / Dec Dec Social Safety Net Structural Adjustment Credit / Credit / Jun Mar Judicial Reform Project / Credit / Jul Mar

49 Year Policy Main Objective Achievements Pending Challenges/Shortfalls World Bank Credits to support The Better Transfer of responsibilities from the Central The decentralization of the National Road Decentralizati management of Government to Prefectures. Service generated inefficiencies and the on Law: assign new the public sector. Allocation of fiscal resources from royalties and hydrocarbon taxes to prefectures National Rural Service was subsequently recentralized functions to different levels of Budget allocations and extraordinary transfers. Competencies of different levels of Improve the delivery of basic services to rural areas. government overlap as they have not been properly defined and assigned. government Pension Law: savings and individual capitalization of contributions. INRA Law: regularization of agricultural land tenure. Strengthening of the social insurance system. Adapting of the body of legislation regulating rural property. Promote rural development. Substitution of the weakened pay as you go social security system, managed by the public sector, by an individual contribution system privately managed by the AFP s Significant increase in pension coverage. Progress in the regularization of indigenous peoples land. Modification of the National Service of Agrarian Reform. The reform cost constitutes a heavy burden for the fiscal accounts (5% of GDP in 2002). The capital market has not been particularly dynamic. The BONOSOL (annual payment for seniors over 65 years) has been interrupted; it is a burden for the public sector and its financial sustainability is questionable. The administrative process of land reclamation and distribution has suffered significant delays as a consequence of political interference. Institutions created in order to apply this law have not been able to operate properly yet. Investment / Adjustment La Paz Municipal Development / Credit / Jan Oct Social Investment Fund / Credit / Dec.1990 Jun.1995 Agricultural Technology Development Project / Credit / Feb Oct Social Investment Fund II / Credit / May 1994 Dec Municipal Sector Development Project / Credit / Aug Dec.1999 Rural Communities Development Project / Credit / Dec.1995 Aug.1999 Rural Water and Sanitation Project / Credit / Oct Jun Participatory Rural Investment Project / Credit / Dec Jun Hydrocarbon Sector Social and Environmental Management Capacity Building Project (LIL) / Credit / Feb Dec Decentralized Energy, Information and Communications Technology for Rural Transformation / Credit / Dec Dec Decentralization Programmatic Structural Adjustment Credit / Credit / May Jun Second Programmatic Structural Adjustment Credit for Decentralization PSAC II / Credit / Jun Jan Financial Markets and Pension Reform Technical Assistance Project / Credit / Jan.1997 Dec Eastern Lowlands: Natural Resource Management and Agricultural Production Project / Credit / Jan Dec National Land Administration Project / Credit / Dec Dec Indigenous Peoples Development Project / Credit / Apr.2001 Dec

50 Year Policy Main Objective Achievements Pending Challenges/Shortfalls World Bank Credits to support 1 Reforms in Improvementof health sector, mother/child SNMN services. implementatio n Securities Strengthening of Law: support the financial for securities system. market. Property and Popular Credit Law: increase micro-credit. Public Works Concession Law 2000 Customs Law: customs reform. Civil Service Law Institutional Structure of Public Tax Administratio n Law Improved conditions for small enterprises. Democratization of credit. Expand the road network. Promote private sector participation in road maintenance Increased collection and improved institutional structure of Customs. Improved institutional structure of the public sector. Improved transparency, efficiency and management of the tax system under a consolidated cash Coverage increase of public health services through the National Mother and Child Insurance (pregnant women and children under 5). Health care coverage extension to seniors over 65 year old through the National Elderly Insurance. Posterior deepening of public health services. The health system is suffering financing problems due to the financial weakness of the various public sector entities at every level of government. Regional coverage is still limited. The financial problems of the National Health Fund (Cajas) have not been addressed. Reduced increase in emission of private bonds. Has been unable to promote a significant development of the stock exchange market. Has been unable to render private enterprise more formal. Reduction of the BONOSOL amount to more sustainable levels, calling it hence BOLIVIDA. Increase in road concessions. Institutionalization of the National Road Service. Progress in the simplification of procedures. Creation of a legal framework for the institutionalization of the public sector. The process of institutionalizing the tax administration starts by the hiring of technical staff The financial system is still vulnerable. Access to credit is still difficult. In 2002, the BONOSOL has been reintroduced with a higher amount. The problem of lack of maintenance in the road sector remains. Expansion plans are too ambitious. Customs revenues first increased and then decreased. Smuggling has not reduced significantly. Customs still suffers institutional problems. A civil service system is not being implemented in the public structure. Efforts remain pilot projects. Tax revenues have not increased as expected. Corruption and inefficiencies within the tax system prevails. 100 Investment / Adjustment Integrated Health Development / Credit / Sept Jun Integrated Child Development Project / Credit / Jun Dec Health Sector Reform Project / Credit / Dec Dec Second Phase of the Health Sector Reform / Credit / Dec Jun Social Safety Net Structural Adjustment Credit / Credit / Jun Mar Regulatory and Privatization Technical Assistance Project / Credit / Feb Mar Regulatory and Privatization Technical Assistance Project / Credit / Feb Mar Second Road Maintenance Project / Credit / Dec Jun Abapo Camiri Highway Project / Credit / Dec Jun Road Rehabilitation and Maintenance Project / Credit / Jun Dec Institutional Reform Project / Credit / Dec Jun Institutional Reform Project / Credit / Dec Jun Institutional Reform Project / Credit / Dec Jun. 2005

51 Year Policy Main Objective Achievements Pending Challenges/Shortfalls World Bank Credits to support Financial Sector Strengthening Law management system. Strengthening bank resolution procedures and facilitating prompt corrective actions for banks with problems. The financial system is strengthened a better bank resolution system is in place Completion of mechanisms of bank intervention. The resolution of urgent problems in the banking sector is still pending. Investment / Adjustment Regulatory and Privatization Technical Assistance Project / Credit / Feb Mar

52 102

53 Annex F Annex F : Bolivia CAS Past World Bank Support to Bolivian Reforms Project / Credit No. / Period Reconstruction Import Credit Project Credit Oct Dec Vuelta Grande Recycling Project Credit Dec Dec Emergency Social Fund Project Credit Nov Jan Public Financial Management Operation Credit Dec Jun Power Rehabilitation Project Credit Jan Dec La Paz Municipal Development Credit Jan Oct Second Reconstruction Import Credit Credit Mar Dec Second Emergency Social Fund Project Credit Jul.1988 Oct 1991 Economic Management Strengthening Operation Main Objective Macroeconomic stability and improve competitiveness Macroeconomic stability Reduce social impact of NEP Efficient use of public resources and macroeconomic stability Strengthen electricity sector Better management of public sector Provide financing critical to reestablish economic growth Reduce social impact of NEP and other economic reforms Adequate functioning of Government s Investment: Project Components A. Rebuild private and public production base through the provision of financing for necessary imported goods. B. Restructure the key sectors of the economy consistent with the new role of the state stipulated in NEP. C. Achieve macroeconomic stability and economic growth. A. Development of the Vuelta Grande retrograde gas condensate field. B. Studies of YPFB s staff policies and organizational efficiency. C. Consultants services and training related to the recycling operation. A. Employment/Income-generation: through the creation of about /man-years of employment for road improvements, erosion control, and urban upgrading that would improve infrastructure and the environment. B. Social Assistance: basic health, education services and school meals. C. Technical Assistance: would allow the Government to test mechanisms prior to embarking on a larger program. A. Strengthen Financial Administration and Control System-SAFCO by: introducing basic systems of accounting, internal controls and cash management in nine public entities, refining systems and capabilities, expanding coverage, building solid budgeting, cash management and operating systems. B. Support the May 1986 tax reform. A. Acquisition of spare parts and equipment for the maintenance program of ENDE s facilities. B. Adaptation of substations to present needs and of the sub-transmission system in Santa Cruz. C. Preparation of a Power Expansion Master Plan. D. Engineering consultant services in preparing specifications and procurement of equipment cost estimates and bid evaluation as well as the preparation of the Power Expansion Master Plan and distribution studies. E. Management consultant services. A. Improvement of Municipal Management: (i) Financial Management Improvement Program; (ii) Municipal Cadaster; (iii) Personnel Management System and Training Program; (iv) Administrative Reorganization Program. B. Urban Transportation C. Urban Development and Infrastructure Improvement D. Technical Assistance E. Other activities A. Action programs for export promotion and economic reactivation in the energy, agriculture, and industrial sectors. B. Facilitate railway and road transport operations that provide essential support to the production sectors. C. Provide the framework for strengthening public investment programming and management as well as a definition of an appropriate policy response to the social problems linked to the period of hyperinflation and subsequent adjustment. A. Social Assistance activities: food and nutrition, health, training & support to education, and small-scale employmentgenerating projects in social infrastructure. B. Institutional Support helping ESF consolidate its management and implementation capacity; budget support for fixed-term staff; and maintenance of office equipment. A. Strengthen economic policy making and management in the areas of public investment programming, sectoral analysis, links between investment and budgeting, implementation of the investment program, project monitoring and evaluation supported by the Public Investment Programming and Implementation Component. Original Amount (Actual Disbursed) (in millions of US$) 55.0 (61.85) 15 (12.8) 10.0 (10.47) 11.5 (11.9) 6.8 (6.8) 15.0 (15.8) 47.1 (48.28) 27.0 (25.0) 9.7 (9.59) 103

54 Project / Credit No. / Period Credit May Jun Export Corridors Project Credit Feb Jun Mining Sector Rehabilitation Project Credit Jun Jun Integrated Health Development Credit Sept Jun Social Investment Fund Credit Dec.1990 Jun.1995 Eastern Lowlands: Natural Resource Management and Agricultural Production Project Credit Jan Dec Main Objective Investment: Project Components finance B. Increase tax revenues through the expansion of on-going work in tax administration-supported by the Tax Administration Component. C. Assist the Government in designing a coherent and well-phased strategy for regional planning and management by supporting studies on the financial, fiscal and institutional implications of decentralization and resources to implement the strategysupported by the Regional Planning and Management Component. D. Improve public sector productivity by supporting the Government's Public Sector Management (PSM) Strengthening Program, including its efforts to rationalize salaries and attract and retain skilled manpower-supported by the PSM Component. E. Implement a living standards measurement survey and support the expanded responsibilities of the country's National Statistics Institute (INE) supported by the Strengthening of Statistical Services Component. Improve competitiveness Dynamism of mining sector Better coverage and quality of public health services Reduce poverty, by improving health and education services Dynamism of agriculture, and increase competitiveness A. Upgrade key links in the transport network, particularly on those corridors connecting Bolivia to its two export routes, one to the Pacific (to the port of Arica in Chile) and the one to the Atlantic (to the river port of Puerto Quijarro). B. Strengthen the functioning of key transport sector institutions, particularly the National Railway Company (ENFE) to make it more market-oriented and the National Road Agency (SNC) to improve road maintenance. A. Institutional Strengthening: (i) restructuring of the Ministry of Mining and Metallurgy (MMM); (ii) strengthening of key areas of the MMM under technical assistance; (iii) organizational restructuring of GEOBOL (Survey Institution); (iv) development of the Mining Development Institute (IDM); (v) creation of the Technical Mine Cadastral Service (STCM); (vi) disbandment of FONEM (Fondo Nacional de Exploracion Minera); (vii) restructuring of BAMIN; and (viii) technical assistance and training courses for BAMIN. B. Financing of Private Mines and Cooperatives: financed investments, working capital, exploration, and pre-investment studies and restructuring workouts. C. COMIBOL: 1. Rehabilitation, 2. Management Strengthening and Training, 3. Joint Venture Promotion. A. Service Delivery: (i) civil works; (ii) services; (iii) a maintenance program; (iv) vehicles, equipment and materials; and (v) essential drugs and medical supplies. B. Human Resource Development: (i) induction to project objectives and procedures, strengthening of the MPSSP system for personnel supervision and in -service training, and improvement of interinstitutional coordination; (ii) basic skills and technical training (pre-service or in-service training); and (iii) training of midwives, and health education campaigns. C. Institutional Development: (i) the restructuring of the MPSSP; (ii) the administrative rationalization of the MPSSP; and (iii) the strengthening the management of the financial, human and physical resources. A. SIF Subprojects: financing for health, education, and institutional support for public and private RAs. B. SIF Institutional Development: support for SIF administration, improvement of an information system and database, and consultant s services to assist in the development and improvement of SIF s financial management and operational capacity. C. Training program to familiarize other public agencies with ESF s systems for information management used in subproject appraisal and supervision. A. Natural Resource Planning and Management: (i) preparation of a comprehensive Land Use Plan for the region; (ii) periodic assessment of forest cover and the monitoring of the application of the Land Use Plan; (iii) soil studies and mapping of up to 800,000 additional ha following completion of the Land Use Plan; (iv) investments for the protection of forest reserves and national parks; (v) management of the biological reserve Laguna La Bahia; and (vi) institutional strengthening of CORDECRUZ s natural resources capability. B. Agricultural Production and Credit: credit to finance soybean and other profitable agricultural crops. C. Storage and Marketing Credit: (i) long-term credit provided to finance the expansion of grain storage by about 14,000 ton; (ii) short -term credit provided for purchasing the incremental production resulting from the project; (iii) between seasons, the repayment of this credit was used to finance working capit al for existing production of soya by small farmers. D. Research: (i) construction of a subregional research center in Pailon; and (ii) strengthening of CIAT s (Tropical Agriculture Research Center) research programs. E. Agricultural Extension: strengt hening of the extension network of public and private agencies in the Dept. of Santa Cruz; F. Rural Road Improvement and Maintenance: financed the improvement of 100 km and maintenance of 200 km of existing rural roads. G. Indigenous Peoples: (i) community organization; (ii) support for the demarcation of tribal land; (iii) training and secondary Original Amount (Actual Disbursed) (in millions of US$) 37.0 ( 37.08) 35.0 (35.0) 20.0 (22.11) 20.0 (21.38) 35.0 (29.0) 104

55 Project / Credit No. / Period Private Enterprise Development Project Credit Jun Jun Major Cities Water and Sewerage Rehabilitation Project Credit Sept.1991 Dec.1997 Second Public Financial Management Operation Credit Dec Dec Agricultural Technology Development Project Credit Feb Oct Agro-Export Development Project Credit Nov.1992 Dec Second Road Maintenance Project Credit Dec Jun Main Objective Improve competitiveness and investment increase Improve water and sewerage services Efficient use of public resources Dynamism of agriculture and increase competitiveness Improve competitiveness Improve competitiveness and development of the market Investment: Project Components education; (iv) social and productive infrastructure; (v) technical assistance; (vi) administrative support to the CIDOB (Central de los Indígenas del Oriente Boliviano). H. Administrative Support. A. Strengthen the private industrial sector. B. Broaden the client base and range of financial instruments available from the banking sector. C. Improve the effectiveness. of public and private institutions providing services to industry. D. Minimize bureaucratic impediments to industrial development. E. Improve managerial, accounting and market ing skills among manufacturers. F. Promote entrepreneurial development and the full liberalization of interest rates. A. SAMAPA (La Paz Municipal Water and Sewerage Services Company): (i) expansion of the Pampahasi water treatment plant; (ii) construction of a storage tank, water transmission line, water distribution infrastructure, sewerage networks and treatment plants; (iii) purchase of equipment for operation and maintenance; (iv) consultancies to prepare final designs for the transmission lines and distribution infrastructure; and (v) technical assistance and training. B. SAGUAPAC (Santa Cruz Public Services Cooperative Limited): (i) expansion of the water system; (ii) rehabilitation of production and distribution facilities, and sewage treatment pond; (iii) construction of sewerage network; (iv) consultancies for preparing final designs; and (v) technical assistance and training for institutional improvement. C. SEMAPA (Cochabamba Municipal Water and Sewerage Services Company): (i) rehabilitation of the Wara Wara reservoir, the Vinto well field, the Chungara infiltration gallery, the Cala Cala water treatment plant, and the Cona-Cona pumping station; (ii) construction of an equipment of four deep wells and construction of a transmission main; (iii) Expansion of distribution infrastructure throughout the city; (iv) consultancies to prepare final designs for investment components and a water supply master plan; and (v) equipment, technical assistance and training for institutional improvement. D. National Component: (i) technical assistance to prepare guidelines for the analysis of water supply and sanitation project s, a framework of tariff policies and a system of indicators, operating manuals and introduce models of technical, economic and financial analysis; (ii) training of staff of FNDR central government departments and other agencies; (iii) preparation of a follow-up sector landing operation; (iv) consultancies to prepare final designs for the transmission lines and distribution infrastructure; (v) technical assistance and training; and (vi) construction of sewerage networks and a treatment plan in El Alto. A. Institutionalize budgeting, accounting, cash management and auditing procedures at various levels of government. B. Enhance the instit utional capacity and skills both at the central and regional government levels to implement new procedures and public financial management systems. C. Provide the government with ex-post control functions vital to the enforcement of accountability for results in the public sector. D. Implement final norms and regulations consistent with the SAFCO Law, to cover all public financial and administrative functions covering budgeting, accounting, cash programming, debt management, personnel, procurement, organizational management, and operations programming. A. Improve the overall efficiency of research and extension. B. Support t echnology development in the highland agricultural sector. A. Operations of BEF, including its enterprise investment program, in the following four sectors: brazil nuts, cochenilla, angora wool and flowers. B. Employment of an internationally recruited management team to run BEF at the start -up and train a Bolivian team to take over the management. C. Provision by BEF of technical assistance to its investment enterprises in marketing, financial management and export. A. Road rehabilitation or about 780 km of paved roads. B. Road rehabilitation of about 765 km of graved roads. C. Bridge maintenance of 77 bridges. D. Work compound construction, upgrading of 58 work compounds. E. Maintenance by Force Account model. Original Amount (Actual Disbursed) (in millions of US$) 16.1 (17.44) 35.0 (35.7) 11.3 (10.99) 21.0 (21.21) 22.5 (16.31) 80.0 (81.54) 105

56 Project / Credit No. / Period Environmental Technical Assistance Project Credit Jun Jun Social Investment Fund II Credit May 1994 Dec Integrated Child Development Project Credit Jun Dec Municipal Sector Development Project Credit Aug Dec.1999 Regulatory and Capitalization Technical Assistance Project Credit Jan Dec Main Objective Better management and control of environment Reduce poverty, by improving health and education services Reduce poverty, by developing children s human capital Better management of public sector Increase private investment Investment: Project Components F. Equipment (rehabilitation). G. Road Safety Program (traffic counters or axle-load control scales). H. Institutional Strengthening (technical assistance and training activities in the areas of planning, financing and supervision). I. Procurement Services. A. Institutional Strengthening of Environmental Agencies: staff training in FONAMA (National Environmental Fund) and SNRMA (National Secretary Resources and Environment). B. Environmental, Legal and Regulatory Framework: (i) development of regulations for the Environmental, the Forestry, the Water, and the Biodiversity Laws; (ii) development of regulations on environmental impact assessment, environmental quality control, environmental aspects of mining and hydrocarbon exploration; (iii) support to Environmental Congressional Commissions with consultancy services for technical assistance; (iv) workshops on public participation in planning ad implementation of regulations; (v) training of public and private sector personnel on environmental legal issues; and (vi) establishment of an environmental law library. C. Environmental Education: (i) pilot projects in primary schools; and (ii) training for teachers. A. Subprojects in health, water supply, sanitation and education sectors including institutional support to agencies requesting subprojects. B. Institutional development: administrative support, vehicles, office equipment, computers and miscellaneous expenses and technical assistance, including studies. A. Sector Policy Development and Management Strengthening: (i) studies and technical assistance; and (ii) consolidation of ONAMFA s restructuring efforts and its incorporation into the CSRP. B. Service Delivery Support: (i) promote the formation and built the capacity of parents associations to assume select administrative functions within the program; (ii) finance the rehabilitation of the caregiver s home to serve as the actual daycare site; (iii) provide children with nutrition supplementation and a basic package of integrated early education services; (iv) ensure their access to key preventive and curative health services through cooperative agreements with local health centers; (v) increase the access of pregnant women who either were caregivers or had children participating in the project to maternity care and family planning services, through preferential fees for service. C. Monitoring and Evaluation: develop and implement management information and evaluation systems. A. Institutional Development: 1. Municipal Service: (i) help Government develop appropriate measures to improve municipal administrations. 2. Municipal Development Institute: establish and support the initial operations of the MDI. 3. Technical Assistance to the Ministry of Human Development: help MHD carry out policy studies and technical investigations related to decentralization and municipalization plans, strengthen its policy making, regulatory and advisory functions in urban development. B. Municipal Strengthening: (i) support the implementation of specific programs for improving accounting systems to the national standards defined in the SAFCO law; and (ii) pilot program to improve the environmental management capabilities of the municipality of La Paz. C. Investment Financing: (i) support the development of priority investment projects for the rehabilitation, extension and development of urban infrastructure networks and public facilities; (ii) benefit municipalities, public utilities and service enterprises and cooperatives with investment activities. A. Strengthen the Capacity of the Ministry of Capitalization: (i) legal and privatization advisors; (ii) establishment of procurement unit; and (iii) Public Information Campaign. B. Strengthen the Institutional Capacity of the Regulatory Agency (CONARE): (i) Establishment of CONARE; (ii) consultant studies; and (iii) training programs for CONARE Staff. C. Telecommunications Sector Reform: (i) telecommunications Law and regulations; (ii) training of CONARE Telecommunications Superintendency Staff; and (iii) installation of specialized equipment for the Telecommunications Superintendency. D. Aviation Sector Reform: (i) preparation of regulations for the aviation sector; (ii) capitalization of LAB (National Bolivian Airline): and (iii) restructuring of AASANA (Airports Administration Company), TAM and TAB. Original Amount (Actual Disbursed) (in millions of US$) 4.8 (4.8) 40.0 (40.83) 50.7 (22.5 as of 11/24/03 ) 42.0 (39.7) 14.7 (15.2) 106

57 Project / Credit No. / Period Education Reform Project Credit Apr Jan Judicial Reform P roject Credit Jul Mar National Land Administration Project Credit Dec Dec Hydrocarbon Sector Reform and Capitalization Technical Assistance Project Credit Dec Dec Rural Communities Development Project Credit Dec.1995 Aug.1999 Rural Water and Sanitation Project Credit Oct Jun Financial Markets and Pension Reform Technical Assistance Project Credit Main Objective Improve quality of primary education Improve functioning of the judicial system Better management and distribution of land Increase private investment in the oil and gas sectors. Increase rural investment Better coverage and quality of public service delivery in rural areas Improve functioning of the financial system. Investment: Project Components A. System transformation and strengthening: (i) registration of teaching and non-teaching personnel.; (ii) rationalization of staffing; (iii) provision of technical assistance for technical and administrative personnel; (iv) provision of information and technical assistance to community organizations; (v) implementation of an integral information system; (vi) design and implementation of an administration system for the education system.; (vii) design and implementation of a new framework for management of the teaching force; and (viii) repair and reconditioning of office space. B. Improvement of pedagogical quality: (i) curriculum development; (ii) transition measures (bilingual and multigrade education); (iii) provision of school equipment, instructional materials, and materials for pedagogical support; (iv) training and pedagogical support for pedagogical advisors, teachers and principals: (v) education research and pilot programs; and (vi) development of and education assessment program. A. Judiciary Components: (i) Judicial Process Reforms: (ii) Human resource Management; (iii) Judicial Information Systems; and (iv) Institutional Strengthening. B. Min istry of Justice Components: (i) Implementation of Constitutional Reforms on Judicial Matters; (ii) Alternative Dispute Resolution; (iii) Community/Traditional Justice; (iv) Legislative Reforms; (v) Institutional Strengthening of the Ministry of Justice. A. Reform of the Legal Framework: (i) Land Policy Studies and Seminars; (ii) Law Establishing the National Land Institute; (iii) participatory process of discussing changes to the 1953 Agrarian Reform Law (develop new Land Law); (iv) refinement and clarification of some articles of the draft of the Law of the Legal Cadastral Registry; and (v) training of judges and other staff of the Agrarian Court on substantive and procedural aspects related to the resolution of land disputes brought before court. B. Land Management Improvement Cadastre: (i) strengthening of National Intervention Commission (CI); and (ii) clarification and systematization of the Land Tenure Situation. C. Identification of Land for Settlement: the CI would identify, reserve and assess the suitability of 500,000 ha of public land to be made available for distribution to small-holders. D. Strengthening of the Property Registry: (i) consulting services to improve the organization and management of at least four Departmental offices; (ii) rehabilitated and enlarged offices of the Santa Cruz and La Paz offices: (iii) finance training and study tours for key staff in land registration, mapping, and organization of a legal cadastre. E. Establishment and Strengthening of INTI (National Land Institute) F. Title Regularization: promoted the Cat -San Process and the the issuance of Registry Certificates. G. Land Settlement Program: (i) upgrade DDRR from a mere registry of property rights to a fully integrated Legal Cadastral Registry; (ii) help establish RLC s (Legal Cadastry Registry) National Directorate in Sucre; and (iii) improve the four Departmental RLC offices in Santa Cruz, La Paz, Chuquisaca and Cochabamba. A. Legal and Regulatory Framework. B. Capitalization of YPFB: 1.Pre-Capitalization Phase and 2. Capitalization Implementation Phase. C. Institutional Strengthening A. Rural Investment Identification and Formulation. B. Training;. C. Institutional Strengthening. D. Rural Investments A. Rural Water and Sanitation Infrastructure Program: Provide water supply facilities, small-scale wastewater collection facilities, treatment and disposal systems, and latrines. B. Technical Assistance for Building Institutional Capacity: finance project management to assist the institutions in charge of project implementation, and technical assistance to strengthen sector institutions and communities in their capacity to provide safe, reliable and sustainable water and sanitation services. A. Establishment of the institutional structure and information systems necessary for regulation and supervision of the proposed pension and capitalization distribution systems. B. Improvement in securities regulation, strengthening the institutional capacity of the Superintendency of Securities, and improving information systems to regulate market activity. C. Establishment of a transparent and efficient process for the distribution of capitalized shares including trustee and Original Amount (Actual Disbursed) (in millions of US$) 40.0 (34.50 as of 11/24/03) 11.0 (9.1) 20.4 (17.8) (8.66) 15.0 (12.89) 20.0 (15.6) 9.0 (7.62) 107

58 Project / Credit No. / Period Jan.1997 Dec Power Sector Reform Technical Assistance Project Credit Jan.1997 Jun.1999 Environment, Industry and Mining Project Credit Jan Jun Financial Decentralization and Accountability Project Credit N-033 AIF Jun-1998 Mar-2003 Participatory Rural Investment Project Credit Dec Jun Education Quality and equity Strengthening Project Credit Dec Dec Regulatory and Privatization Technical Assistance Project Credit Feb Mar Main Objective Increase private investment in the power sector Improve environmental management in the mining and industry sectors Improve financial management of the public sector Increase rural invest ment Better coverage and quality of public education Improve functioning of the financial sector. Increase private Investment: Project Components international bidding arrangements. D. Continue the institutional strengthening of the Superintendency of Banks. A. Technical Group and Regulatory Framework. B. Transition Requirements. C. Unbundling and Restructuring. D. Capitalization and Privatization. A. Studies to Support the Development of the Regulatory Framework. B. Laboratory Upgrading: program to foster development of credible laboratory testing services in Bolivia. C. Remediation Investments: (i) environmental improvement interventions of specific sites; and (ii) remediation activities that remove impediments to private investment in COMIBOL mines. D. Technical Assistance and Training to Support Environmental Management in Mining: Financing for consulting services. A. Implementation of Decentralized Integrated Financial Mgmt. Systems (IFMS). B. IFMSA Public Sector-Wide Integration via installation of telecom links. C. Budget Transactions Payment Systems Modernization via Banking Network. D. Dissemination of integrated financial management operations, and public financial regulations. E. Project Operating Costs. F. Government Auditing Strengthening and Decentralized Sector Evaluations. G. Implementing Audit Capability for Operational and Special Audits. H. Anti-corruption auditing techniques and public sector ethics dissemination. I. Training in Accounting, Auditing and Financial Management. J. Contingencies and PPF. A. Rural Investments: consulting services for pre-investment studies, and works, goods, equipment for rural investment subprojects including: (i)improvement of access roads and construction and rehabilitation of bridges; (ii) community smallscale irrigation systems; (iii) markets and produce storage facilities; (iv) river embankment improvements; (v) natural resources management; (vi) technical assistance to rural producers; and (vii) cultural heritage rehabilitation and other minor works identified by municipalities and communities. B. Institutional Strengthening: (i) technical assistance to municipalities, indigenous districts, rural communities and NGOs in municipal management, participatory planning and implementation; subproject planning, preparation, implementation and maintenance, subproject financial management and administration, environmental management and municipal revenue generation; (ii) formal training for staff of municipalities and indigenous districts in municipal management and non-formal training of municipal councils, vigilance committees and community leaders; and (iii) consultants, office equipment, vehicles and incremental operating costs for prefectures, the Vice-Ministry of Popular Participation and Municipal Strengthening, FDC and the Vice-Ministry for Rural Development. A. Municipal Educational Development Program: comprise the funding of Educational Projects for Nucleus within the Curricular Transformation Program (Infrastructure and Pedagogical/Curricular). B. Institutional Strengthening: (i) comprise training, technical assistance and equipment for municipalities, nucleus, and equipment for District Head Offices; (ii) Inventory of Condition of Educational Existing Infrastructure; and (iii) Information Sub-System. C. FIS (Social Investment Fund) Investments. D. Rural Girls Schooling: research-action component aimed at establishing a strategy based on several alternatives that will allow for a sustained increase of female enrollment and permanence within the educational system in rural areas. E. Studies on Secondary and Tertiary Education: carrying out of studies to evaluate and make recommendations on the expansion of the Education Reform Program to secondary and tertiary education. A. Financial Sector 1. Banking Sector: Technical assistance: (i) establishment of a Deposit Guarantee Fund (GDF); (ii) improvement of Prudential Legal and Regulatory Framework; (iii) rest ructuring of the Supervisory and Regulatory Institutional Framework; (iv) enhancement of SPEF Supervisory Functions (Superintendencia de Bancos y Entidades Financieras); and (v) redefinition of Central Bank s Lender of Last Resort Facilities 2. Non-Banking Sector: Technical assistance: (i) redefinition of Supervisory Institutional Structure; (ii) enhancement of the Original Amount (Actual Disbursed) (in millions of US$) 5.1 (4.56) 11.0 (6.78 as of 11/24/03) 15.0 (14.12 ) 62.8 (23.34 as of 11/21/03) 75.0 (65.1 as of 11/24/03) 20.0 (13.68 as of 11/24/03) 108

59 Project / Credit No. / Period Abapo Camiri Highway Project Credit Dec Jun Health Sector Reform Project Credit Dec Dec Institutional Reform Project Credit Dec Jun Hydrocarbon Sector Social and Environmental Management Capacity Building Project (LIL) Credit Feb Dec Sustainability of the National System of Protected Areas Program (GEF) Mar Jul Main Objective investment. Increase private investment and export promotion. Better coverage and quality of public health services Improve functioning of the public administration. Improve social and environmental management in the gas and oil sector Improve environmental management of protected areas Investment: Project Components Insurance Industry Supervisory Agency; (iii) enhancement of the Pension and Capital Markets Supervisory Framework. B. Infrastructure and Business Regulations 1. Cross-Sectoral and Competition Regulatory Reform: Technical assistance in: (i) drafting of Competition Law and Institutional Support; and (ii) drafting of Amendment to SIRESE Law and Administrative Procedures Law. 2. Sector-Specific Infrastructure Regulatory Reform: Technical assistance in drafting of General Transport Law, Transport Concession Regulations and Institution Buildup; payment of the international and local legal expertise required to develop new regulations for: (i) refinery operation; (ii) natural gas distribution; (iii) natural gas storage and reinjection; (iv) liquids storage; and (v) jet fuel supply. A. Abapo-Camiri Highway: Reconstruction and paving of the Abapo - Camiri highway of 152 km. B. B. Access Road to El Espino (38 km): Reconstruction and paving of an existing dirt road to provide access to the corridor for the indigenous communities. C. Comprehensive Maintenance by Contract: A program of comprehensive maintenance by contract for the period D. D. Institutional Strengthening: of VMT and SNC through the provision of technical assistance. A. Coverage and Quality Improvements of the health services and empowerment of communities: (i) implementation of a new medium term plan for immunizations; (ii) implement new strategies for the Integrated Management of Childhood Illness and for the Mother-Baby Package; and (iii) finance demand-driven local subprojects to strengthen inter alia the quality of maternal and child services; the development of so cial communication activities to strengthen the information, voice and empowerment of beneficiaries; and the implementation of new instruments of health sector management. B. Strengthening local capacity to respond to health needs: (i) implementation of a basic health insurance system (SBS): (ii) strengthening the development of the management information system; and (iii) strengthening the capacity and accountability of the health districts to manage and supervise the implementation of project activities. C. Coordination, Monitoring and Evaluation: (i) establishment and operation within the Ministry of Health of a management structure appropriate for the coordination of all project activities and the monitoring and evaluation of the project accordance with the project performance benchmarks. A. Performance Evaluation: (i) creation of legal framework; and (ii) designing of evaluation systems. B. National Integrity: (i) legal framework reform; (ii) development of prevention policies and mechanisms; (iii) Ombudsperson s Office; (iv) streaming of bureaucratic procedures; (v) procurement reform; and (v) social communications. C. Civil Service: (i) legal framework reform; (ii) personnel systems development; and (iii) rector institution capacity building. D. Organizational Reform: (i) restructuring/strengthening of pilot agencies; (ii) support for professional cadre positions in pilot ministries; and (iii) budgeting reform. E. Reform Management: project coordination unit. A. Institutional Strengthening: (i) Technical assistance for the regulation and mitigation of social and environmental impacts of hydrocarbon activities; (ii) training of government agencies staff, civil society organizations, locally affected communities and local consultants; (iii) Inter-institutional Coordination; and (iv) consultation workshops with stakeholders. B. Logistics and communications. C. Information Baseline and Studies. D. Administration, Coordination and Monitoring. A. Institutional and Policy Development: (i) Development of a Master Plan to coordinate SERNAP (National Service of Protected Areas) role as the regulatory agency of the SNAP (National System of Protected Areas); (ii) preparation of a strategic institutional and financial plan for SERNAP, including a medium-term financial strategy; (iii) identifying mechanisms for generating internal revenues, including: service fees collection, income from the sale of carbon offset, and environmental easements and concessions; and (iv) strengthening SERNAP technical, managerial andoperational capacity. B. Management of Priority Protected Areas: (i) strengthening the operational capacity at the 10 priority protected areas; (ii) strengthening of local participation and inter-institutional coordination at the 10 priority PAs. C. Legal and Regulatory Framework: (i) prepare and approve the Protected Areas Law and support the approval of the Biodiversity Law; (ii) review and propose amendments, as needed, to cross-sectoral laws and regulations; and (iii) prepare specific SNAP regulation for PA management. D. Sustainable Financing: strengthen the financial capacity of the SNAP and identify the mechanisms to ensure its long-term Original Amount (Actual Disbursed) (in millions of US$) 88.0 (46.49) 25.0 (22.41 as of 11/24/03) 32.0 (11.77 as of 11/24/03) 4.8 (2.27 as of 11/21/03) 15.0 (9.1 as of 11/24/03) 109

60 Project / Credit No. / Period Indigenous Peoples Development Project Credit Apr.2001 Dec Second Phase of the Health Sector Reform Credit Dec Jun Road Rehabilitation and Maintenance Project Credit Jun Dec Decentralized Energy, Information and Communications Technology for Rural Transformation Credit Dec Dec Main Objective Promote social inclusion Better coverage and quality of public health services Development of markets, by improving the national road network Increase access to electricity in rural areas Investment: Project Components sustainability. E. Biodiversity Management and Monitoring in Protected Areas: (i) development of models for biodiversity and natural resources management in PAs; and (ii) monitoring and evaluation of biodiversity conservation. A. Culturally -based pilot investments: assistance to proposals that are culturally based and economically, socially and environmentally viable and sustainable. B. Poverty-reduction monitoring and learning: institutional strengthening and training of national level indigenous/campesino organizations and their regional institutions. C. Project management: the unit would be in charge of project coordination, financial administration, and dissemination of lessons learned. A. Coverage and Quality improvements of the SBS (Basic Health Insurance) and empowerment of Communities: (i) strengthening policy development, regulation and monitoring of the SBS; and (ii) strengthening National Health Programs for Mothers and Children. B. Local Capacity to respond to health needs of the population: (i) assignment of health teams to expand the coverage of the SBS: and (ii) investment sub-projects to expand the coverage of the SBS; these sub-projects would finance civil works and equipment requires to make an effective use of the new health teams assigned to currently underserved areas. C. Monitoring of Performance Indicators and Project Coordination: Performance Agreements assigning resources and setting targets for the expansion of coverage signed with regions and selected municipalities. A. Rehabilitation of priority segments of the national road network: km. B. Pilot of rehabilitation of secondary (departmental) roads: around 200 km. C. Road Maintenance National Account (CNCV) and Resurfacing Program: funding of a Cuenta Nacional de Conservacion Vial (CNCV), which would be the source of financing for the routine maintenance and resurfacing program for the national network. D. Technical Assistance: (i) development of a road safety initiative to strengthen the country s capacity to attend and reduce road accidents: (ii) pre-investment studies, to support the preparation of technical, social and environmental studies for new road projects. E. Institutional Development: (i) consolidation of the institutional reform of the sector entities, mainly SNC and the SEPCAMs (of the prefectures); (ii) development of alternative mechanisms for carrying out road maintenance activities, from microenterprises or performance-based contracts, towards enhancing the efficiency of the use of the resources of the CNCV; (iii) development of information management areas related to the technical assistance and institutional development subcomponents; and development of a road safety initiative to strengthen the country s capacity to attend and reduce road accidents. A. Increase access to rural electricity and ICT services by using innovative, output -based, decentralized service delivery models with increased private-sector participation and community in volvement. B. Define and implement improvements in policy, regulatory and institutional frameworks, and strengthen the respective key institutions. C. Identify and develope applications for the productive and social uses of electricity and ICT; D. Intensively promote the new services, including market development and training of local users, service providers and authorities. E. Implement rigorous monitoring and evaluation programs. Original Amount (Actual Disbursed) (in millions of US$) 5.0 (0.61 as of 11/21/03) 35.0 (4.75 as of 11/24/03) 77.0 (8.8 as of 11/24/03) 20.0 (0) 110

61 Project / Credit No. Financial Sector Adjustment Credit , , , Sept.1988 Dec Structural Adjustment Program Credit Dec.1991 Dec Main Objective Improve functioning of the financial system Achieve higher growth by improving the allocation of public resources. Adjustment Project Conditionalities First tranche and credit effectiveness: A. Issuance of a Supreme Resolution approving a new version of the Central Bank Statute, describing the functions of the newly created Vice-Presidency for the Financial System. B. Nomination of the person to act as head of the Vice-presidency for the Financial System and hired staff necessary to make it fully operational. C. Issuance of a Supreme Decree eliminating the possibility of bank recapitalization through lending to shareholders and issuance by the the Superintendency of a resolution prohibiting banks to reschedule, renew or finance loans already provided for this purpose. D. Issuance of a Supreme Decreee authorizing the Central Bank to purchase assets from commercial banks, as part of its efforts to rehabilitate banks, subject to an obligation on the part of such banks to repurchase such assets. Second tranche: A. Issuance of Supreme Decree enacting the Reglamento of the Superintendency, Congress draft amendments of the existing bank supervisory legislation prepared and presented, allowing the Superintendency to permit an intervened bank to continue functioning, and enhancing the Superintendency powers to apply sanctions and fines to banks not complying with norms and regulations. B. Issuance of necessary regulations to make effective a solution to the dedollarization issue. C. Finish satisfactory plans of action and implementation schedules to restructure the Banco Agricola de Bolivia (BAB) and the Banco del Estado (BANEST). D. Evidence of satisfactory performance in maintaining macroeconomic framework consistent with the financial sector reform progress. First tranche and credit effectiveness: A. Issuance of supreme decrees providing for the closure or privatization of BAB, BAMIN, and FONEM, in the interim these banks will receive no subsidy form the Treasury. B. Issuance of a supreme decree requiring BANEST to cease lending operations and limiting BANEST s role to being a financial agent to the Government and provider of selected banking services. C. Provision of authority for large taxpayers to make tax payments through the commercial banks. D. Submission of action plans for the recovery, sale, legal adjudication and liquidation of financial and fixed assets of BAB, BAMIN, FONEM and BANEST. E. Submission of plans for reductions in employment in BAB, BAMIN, FONEM and BANEST. F. Designation of professional staff to manage the liquidation of the public banks. G. Initiation of a study to determine the potential for using the private sector as a financial agent and the costs and benefits of the provision of banking services by BANEST, on a branch by branch basis. H. Issuance of a supreme decree prohibiting the Fondo de Desarrollo Campesino from lending directly to final borrowers. I. Issuance of a supreme decree establishing new non-bank financial intermediaries and issuance of a Central Bank resolution providing eligibility criteria for access of banks and non-banks to development credit. J. Establishment of an auction system for the allocation of development credit to financial intermediaries. K. Presentation of the banking law to Congress. L. Submission of an action plan for the improvement of supervision and regulation of the banking system. M. Compliance with the program for limiting COMIBOL losses. N. Preparation of an action plan to eliminate all transfers to public enterprises (excluding those for agreed public services) and for the elimination of major arrears in the debts among public enterprises. O. Establishment of an inter-ministerial commission to set policies for the privatization program, issuance of a policy statement and for the privatization program, and approval of a privatization agenda setting out enterprises to be brought to point of sale, sufficient to meet the conditions for second trance release. P. passage of the mining, hydrocarbon and investment laws by Congress. Second tranche: A.Continued maintenance of a macroeconomic reform program consistent with the objectives of the program and satisfactory performance of the Government s program. B. For BAB, BAMIN and FONEM, either: (i) closure of the institution, dismissal of employees not involved in loan recuperation Original Amount (Actual Disbursed) (in millions of US$) ( ) (84.75 ) 111

62 Project / Credit No. Capitalization Program Adjustment Credit Credit , , , Dec.1995 Feb Main Objective Achieve higher growth, by increasing private investment levels. Adjustment Project Conditionalities or liquidation and compliance with the program for the sale, legal adjudication and liquidation of their financial and fixed assets; or (ii) sale to the private sector with no remaining Government participation. C. Completion of either: (i) closure of branches of BANEST which are not found to be cost effective or justifiable, transfer of its functions which can be handled efficiently by the private sector and compliance with the program for the recovery, sale or liquidation of BANEST s financial and fixed assets; or (ii) sale of BANEST to the private sector with no remaining Government participation. D.Implementation of eligibility criteria for access of banks and non-banks to development credit and supervision of these intermediaries consistent with sound regulatory practices. E. Passage of the Banking Law by Congress and implementation of the regulations. F. Implementation of the action plan to improve supervision and regulation of the banking system. G. Completion of a plan for the reorganization of COMIBOL and closure of unprofitable mines. H.Approval for privatization, completion of asset valuations and sales documentation and offer for sale of at least 51% of the voting shares held by the Government have been made in respect of either: (i) Lloyd Aereo Boliviano, 2 large enterprises and 3 small enterprises, or (ii) 3 large enterprises and 5 small enterprises. I. An approved privat ization agenda setting out enterprises to be brought to point of sale, sufficient to meet the conditions for disbursement of the third thanche. Third tranche: A. Continued maintenance of macroeconomic policies consistent with the goals of the program and satisfactory performance of the Government s program. B. Compliance with the program for the sale, legal adjudication and liquidation of the financial and fixed assets of BAB, BAMIN and FONEM. C. Compliance with the program for the recovery, sale and liquidation of BANEST s financial and fixed assets. D. Continued implementation of the regulations for the Banking Law. E. Elimination of transfers from the Treasury to public enterprises and elimination of arrears in the payment of debts among public enterprises. F. Implementation of a requirement that commercial banks make provisions in amounts equivalent to 10% of their Class 3 loans. G. Approval for privatization, completion of assets valuations and sales documentation and offer for sale of at least 51% of the voting shares held by the Government have been made in respect of either: (i) Lloyd Aereo Boliviano, 4 large enterprises and 5 small enterprises, or (ii) 5 large enterprises and 6 small enterprises. Before Board Presentation: A. Maintenance of a sound macroeconomic framework consistent with the objectives of the program. B. Compliance with the policy objectives and programs described in the Letter of Development Policy (Capitalization and Public Enterprise Reform, Regulatory Framework, Financial Sector Reform, Judicial Reform). C. Passage by Congress of the Capitalization Law. D. Establishment of a structure to coordinate and direct the capitalization process. E. Agreement on a strategy to transfer partial ownership of key public enterprises to the Bolivian people. F. Passage by Congress of a regulatory framework Law (SIRESE). G. Passage by Congress of an amendment to Tax Law 843 to establish a new corporate regime. H. Presentation to Congress of a new Telecommunications Law. I. Agreement on plan to recapitalize local service and capitalize ENTEL. J. Passage by Congress of Electricity Law. K. Hiring of financial advisors/investment bankers to prepare ENDE for capitalization. L. Agreement on strategy to capitalize ENDE. M. Agreement on a draft amendment to the Mining Law to increase the attractiveness of the sector to long-term investors. N. Agreement on a strategy to capitalize EMV and other mining assets. O. Hiring of financial advisors/investment bankers to prepare EMV and other mining assets, with long-term leasing rights for mines, for capitalization. P. Agreement on a draft Hydrocarbons Law. Q. Passage by Congress of an amendment to Tax Law 843 to establish a new tax regime for liquid fuels to restore price transparency and stimulate competition in downstream operations. Original Amount (Actual Disbursed) (in millions of US$) 61.2 (63.1) 112

63 Project / Credit No. Regulatory Reform Sector Adjustment Credit Credit , Dec.1998 Sept Main Objective Strengthen the stability and efficiency of the financial sector Adjustment Project Conditionalities R. Agreement on principles for the capitalization of YPFB. S. Agreement on basic principles of a revised pensions system. Floating Tranche Conditions: General Capitalization Floating Tranche: Parts A + B; Hydrocarbons Sector Floating Tranche: Parts A + C; and Financial Sector Floating Tranche: Parts A + D. A. Part A: (i) maintenance of a sound macroeconomic framework consistent with the objectives of the program; and (ii) compliance with the policy objectives and programs described in the Letter of Development Policy B. Part B: (i) issuance of regulations for competitive bidding for companies to be capitalized under the Capitalization Law; (ii) promulgation of key regulations for the SIRESE Law and appointment of Superintendent General; (iii) promulgation of key regulation(s) to implement the new corporate taxation system established in the amendment to Tax Law 843; (iv) passage by Congress of new Telecommunications Law; (v) promulgation of key regulations to implement the law including new tariff and interconnection structures; (vi) Government to invite bids for the capitalization of ENTEL; (vii) establishment and staffing of the Superintendecy of Telecommunications within SIRESE to award and supervise concessions and monitor compliance with regulations; (viii) promulgation of key regulations to implement the Electricity Law; (ix) establishment and staffing of the Superintendecy of Electricity within SIRESE to award and supervise concessions and monitor compliance with regulations; and (x) passage by Congress of amendment to the Mining Law. C. Part C: (i) passage by Congress of a new Hydrocarbons Law and promulgation of key regulations to implement this law; (ii) promulgation of key regulation(s) to implement the new excise taxes on the petroleum products established in the amendment to Taw Law 843; (iii) establishment and staffing of regulatory and other agencies to award and supervise concessions and monitor compliance with regulations; (iv) agreement on a strategy to capitalize YPFB; (v) issuance of tender documents for capitalization of at least 30% of YPFB. D. Part D: (i) passage of Securities Law and enactment of key regulations; (ii) strengthening of the Superintendency of Securities to supervise compliance with the Securities Law and regulations; (iii) passage of a Pensions Law providing for: (i) reform of existing and establishment of new contributory retirement funds; and (ii) the establish ment of non-contributory accounts for share distribution from capitalization; (iv) promulgation of key regulations; (v) establishment and staffing of a regulatory authority to supervise compliance with the Pensions Law and regulations; (vi) passage of Insurance Law and enactment of key regulations; and (vii) strengthening of the Superintendency of Insurance to supervise compliance with the Insurance Law and regulations. Before Board Presentation and First Tranche A. Macroeconomic Framework: maintenance of a sound macroeconomic framework consistent with the program objectives. B. Overall Regulatory Framework: maintenance of legal framework assuring independence and operational autonomy of regulatory system for financial and infrastructure sectors. C. Financial Sector Regulation 1. General: (i) passage of PCP (Property and Popular Credit) Law, and operation of CONFIP (Prudential Financial Norms Committee) and SRJ (Superintendency of Appeals); and (ii) presentation to Congress of FSF (Financial Sector Strengthening) Law. 2. Banking: (i) passage of PCP Law: and (ii) presentation to Congress of FSF Law; and (ii) consideration by Congress of ENB (Non/Banking Intermediaries) Law. 3. Pensions, Securities, and Insurance: (i) establishment of a risk classification commission; and (ii) passage of PCP Law, and agreement on the principles determining the base benefit payments under Article 10(a) of this law as set out in the Letter of Development Policy. D. Infrastructure Regulation (and Privatization of YPFB Residuals) General:: (i) passage of PCP Law; and (ii) passage of Transport Concession Law. Second Tranche Conditions A. Macroeconomic Framework:(i) maintenance of a sound macroeconomic framework consistent with program objectives. B. Overall Regulatory Framework: (i) issue of administrative resolutions by SPEF (Superintendency of Banks and Financial Identities), SPVS (Superintendency of Pensions, Securities and Insurances), and SIRESE (System for Sectorial Regulation), to establish benchmarks for staffing size and enact Codes of Conduct in line with international best practice; (ii) passage of an Administrative Procedures Law; (iii) presentation to Congress of a general Competition Law. C. Financial Sector Regulation 1. General: passage of FSF Law. Original Amount (Actual Disbursed) (in millions of US$) 41.8 (22.3) 113

64 Project / Credit No. Decentralization Programmatic Structural Adjustment Credit Credit May Jun Second Programmatic Structural Adjustment Credit for Decentralization PSAC II Credit Jun Jan Social Safety Net Structural Adjustment Credit Credit Jun Mar Main Objective Better management of the public sector. Better management of the public sector. Support fiscal adjustment by closing a financing gap and expanding the provision of key social services. Adjustment Project Conditionalities 2. Banking: (i) passage of FSF Law: (a) operation of the Deposit Guarantee Fund; (b) promulgation of regulation pertaining to liquidity risk; (c) promulgation of key complementary regulations; and (ii) promulgation of key regulation and preparation of timetable for application covering provisioning requirements based on clear criteria for asset classification. 3. Pensions, Securities, and Insurance D. Infrastructure Regulation (and Privatization of YPFB Residuals)General: (i) issuance of regulation pertaining to the SIRESE Law to create a consultative body to coordinate the development of norms for the sector regulated by SIRESE; (ii) passage of Basic Sanitation Law and key regulations; (iii) appointment of a Superintendent of Basic Sanitation; (iv) signing of concession contracts establishing tariff regimes, service standards, and coverage targets for six water supply and sanitation providers chosen from a priority list; (v) signing of concession contracts establishing tariff regimes, service standards, and investment targets for four electricity distribution providers chosen from a priority list; (vi) amendment of the Electricity Law in order to enable the Superintendency of Electricity to regulate the services of the electricity distribution providers; (vii) divestiture of YPFB holdings; (viii) sale or establishment of joint ventures with private management for the three YPFB refineries; and (ix) withdrawal of YPFB from wholesale marketing operations. Prior to Board Presentation and release of a Single Tranche A. Intergovernmental Fiscal Relations National Compensation Policy and Matching Grant Mechanism: (i) establishment of a National Compensation Policy; and (ii) establishment of FPS. B. Improving the Availability of Credit Financing for Municipal Investments. C. Municipal Debt Rescheduling: restored creditworthiness to overindebted municipalities. D. Financial Management and Procurement: (i) Government enact the Supreme Decree for SIGMA implementation; and (ii) Government promulgat a norma basica on procurement. E. Enhancing Community Participation. F. Improving the participation of community groups, especially the poor and indigenous peoples, in local affairs: (i) Government present to the Congress a draft law based on the results of the National Dialogue; and (ii) Government prepare a decree to the Law of Municipalities in aspects addressing municipal associations. The Credit will be released in a Single Tranche. A. Improve the regulatory and institutional framework for decentralization. B. Strengthen governance and enhance community participation. C. Support fiscal discipline at the subnational level. D. Continue efforts to strengthen fiduciary management and institutional capacity of all levels of government. Prior to release of First Tranche A. Budget Protection: (i) approval of PGN for 2003; and (ii) protection of programs against budgetary reductions. B. Social Protection Workfare: 1. Contracts are signed by DUF with the administration of PLANE II, 2. Enhancement of program quality and effectiveness: revised technical guide for program operation, 3. FPS: resolution containing new rates of municipal counterpart financing and implementing rules. C. Health Sector Reform: 1. SEDES: performance agreements for 2003 signed between the 9 SEDES and the Ministry of Health, 2. SUMI: (i) the law is passed; and (ii) the implementing regulations transfers to municipalities are issued, 3. Rights of the pregnant woman: the Bill of Rights of the Pregnant Woman is issued by the Ministry of Health. D. Education Sector Reform: Draft of Strategic Sector Plan. Prior to release of Second Tranche A. Budget Protection: (i) approval of PGN for 2003; and (ii) protection of programs against budgetary reductions. B. Social Protection Workfare: 1. PLANE II: at minimum 300,000 temporary jobs of one-month s duration have been generated by the program, 2. Enhancement of program quality and effectiveness, 3. FPS: the study on options for increased financing of labor-intensive projects is complete. C. Health Sector Reform: 1. SEDES, 2. SUMI: regulations specifying procedures are issued by the Ministry of Health, 3. Rights of the pregnant woman. Original Amount (Actual Disbursed) (in millions of US$) 60.0 (60.95) 25.0 (25.41) 35.0 (25.55 as of 11/24/03) 114

65 Annex G. Experience over the last CAS period Country: Bolivia Date of CAS: May 1998 Date of Progress Report(s): May 2001 Annex G Introduction The last full Country Assistance Strategy (CAS) for Bolivia was designed to cover five years (FY98-FY02) so as to coincide with the term of the then-newly-elected Government of Hugo Banzer. It was entirely aligned with the government s development plan except for the component relating to coca eradication policy where the Bank decided to not be active because it does not have a comparative advantage in the area. In May 2001, in light of two important developments that would have an impact on the Bank s assistance the introduction of the Comprehensive Development Framework (CDF) and the preparation of Bolivia s Poverty Reduction Strategy Paper (PRSP) a CAS Progress Report was presented to the Board. The CAS Progress Report presented a planned lending program for FY03 that included new actions to make the Bank s program consistent with the PRSP. This annex looks back at the country planning process and the achievement of country results and CAS outcomes over the last CAS period ( ). It also assesses the performance of the Bank during the previous CAS period in terms of the quality of its products and services, the delivery of its lending and technical assistance program and the status of the portfolio. Over the last years, the Bank has worked closely with other donors to support the government s program. Thus, this report presents some of the important findings from an Operations Evaluation Department (OED) assessment of the implementation of the CDF in Bolivia, which allowed the Bank to play an important role in the donor coordination effort. It also reports on the extensive consultation process that culminated in the preparation of the country s PRSP, which was fully supported by the Bank. This report concludes by presenting a brief assessment of the performance of the CAS. A. Country Planning Process Following a nation-wide participatory process that brought together government and civil society representatives in 1997 (known as the First National Dialogue), the Banzer Administration developed a National Action Plan for the period. The plan was a comprehensive strategy structured around four pillars dignity, equity, institutionality and opportunity designed to deal with coca eradication, improve social indicators and reduce inequality, promote institutional reform and foster economic growth and reduce poverty. It identified the most important development challenges and possible actions to address them. In 1997, the incoming Banzer Administration also launched an external aid framework called the Nuevo Marco de Relacionamiento entre el Gobierno y la Cooperación Internacional, a proposal aimed at increasing the effectiveness of development aid and aligning external assistance with political vision. In May 1999 the Government and the Bank officially launched the CDF, but the implementation of its principles long-term holistic vision, country ownership, country- led 115

66 partnership and results orientation took place in the middle of a complex situation: at the same time that recognized economic, social and institutional advances were taking place, social tensions were becoming even more evident. By 2000 Bolivia was eligible for a debt reduction package under the enhanced Highly Indebted Poor Countries (HIPC II) initiative. Bolivia qualified to begin receiving assistance under HIPC II when the Boards of the Bank and the International Monetary Fund (IMF) endorsed the country s PRSP in early One of the noteworthy features of Bolivia s PRSP is that it was developed following an extensive bottom-up consultation process. In 2000, the government undertook a broad consultation process with civil society and with representatives of municipal governments known as the Second National Dialogue. The PRSP considerably redefined the nature of the government s interventions by recognizing the important role municipalities should play in reducing poverty. With the HIPC II debt relief, for the first time resources were going to be distributed to municipalities in accordance with poverty criteria. The PRSP was a comprehensive strategy organized around the following four strategic components: (i) expanding employment and income opportunities by supporting and promoting productive capabilities, (ii) building capabilities by guaranteeing improvements in the delivery of social services, (iii) increasing security and protection for the poor and the most vulnerable segments of the population, and (iv) promoting integration and social participation. Tracking Results There have been several efforts to set and track targets related to development outcomes in Bolivia. The country s initial efforts at identifying results and establishing performance targets began with the HIPC I initiative in 1998 and were taken up again as a central part of the progress review conducted during the Consultative Group (CG) meetings later that year. This set of indicators and target goals replaced those indicators established under the National Action Plan. In August of 2000, the Government noted that 16 out of the 17 core targets were met. In particular, significant advances were made in increasing the productivity of labour in the nontraditional agricultural sector, providing piped water, modernizing public administration, and eradicating coca. Bolivia s PRSP established the overarching goal of reducing poverty levels from 63 percent in 2000 to 41 percent by It is difficult at this early stage to report on progress in this longterm goal, but the PRSP also established another set of impact, intermediate and results indicators that are being closely monitored by the Government. Since the PRSP was endorsed in early 2001, the Government s Economic and Social Policy Analysis Unit (UDAPE) prepared a series of progress reports. In qualitative terms, these reports identify the main recognized achievements of the PRSP to be: (i) a better targeting of resources at poverty reduction; (ii) the progressive distribution of resources so as to benefit the poorest population and the creation of the Fondo Solidario Municipal to reduce the historical shortage in the availability of teachers and health staff, primarily in poor rural municipalities; (iii) the development of participatory mechanisms at the municipal level to improve decision-making in resource allocation; (iv) the implementation of the Mechanism of Social Control (MCS), which includes civil society institutions and an inter- institutional government committee, designed to improve participatory evaluation mechanisms to follow-up on the PRSP; and (v) substantial progress regarding the PRSP implementation plan. 116

67 The implementation of the CDF in Bolivia strengthened the focus on results in the public sector and the donor community. By 2000, Bolivia was already known as one of the two countries that had made the most overall progress among all CDF countries. The OED carried out a multipartner evaluation of Bolivia s progress in all four principles of the CDF: a long-term, holistic framework; results orientation; country ownership; and country-led partnership. According to the OED evaluation, there have been important achievements under the CDF, Bolivia s PRSP has succeeded in articulating a long-term vision focused on poverty alleviation, and other wideranging reforms have taken place. Government ownership of the CDF was strong and the process of developing the PRSP was a step forward in extending its principles beyond the public sector. The development of the PRSP benefited from strong participation from various segments of civil society, and it emerged as a bottom-up process. The continuation of the process has being guaranteed by the passage of the Dialogue Law. Progress has also been made in the government taking ownership of the donors long desired goal of improving the civil service system. In terms of partnership, an effective in-country forum for partner coordination was temporarily in place, and donor assistance programs were aligned with the country National Action Plan and then with Bolivia s PRSP. The increased government participation in donorgovernment CG meetings is a major advance, while steps have been taken in moving away from traditional donor-driven and freestanding projects toward broader sector-wide approaches that support national goals. With regard to a focus on results, the development of information systems has been impressive in the last few years (a summary of the production of statistical information is provided in Box. 1) and there has been some progress in elaborating mechanisms to track development results. Box 1. Information systems In general, the production of statistical information is carried out in conjunction with the organizations that make up the National System of Statistical Information. The actual production of basic statistical information in Bolivia is realized principally by the National Institute of Statistics (Instituto Nacional de Estadistica, INE), the Economic Analysis Policy Unit (Unidad de Análisis de Políticas Económicas y Sociales, UDAPE), and the sectoral ministries. Raw data is obtained through the national censuses, surveys, and administrative registers which, in turn, are compiled from health centers, educational units, ministries, municipal offices, and some public comp anies. The Instituto Nacional de Estadistica (INE) collects and maintains all data sources for poverty reduction efforts. There are two principal data sources used for measuring and monitoring poverty in Bolivia: a national census (of which the last installment was in 2001) and various household surveys. The national census (Censo Nacional de Poblacion y Vivienda), carried out approximately every ten years, provides data on non-monetary indicators of well-being which is then used for building poverty maps and targeting government interventions using the concept of Unmet Basic Needs (Necesidades Basicas Insatisfechas or NBI). The INE-UDAPE- Censo 2001 recently provided an update of the country s NBI-based poverty map (2002). In addition to this census, Bolivia s INE has implemented over the years a number of multi-purpose household surveys. Until 1995, INE carried out the Encuesta Integrada de Hogares in Bolivia s larger cities. The key results for the period are available on CD-ROM, and standardized data files for selected years have been prepared by CEPAL. In 1996 and 1997, INE implemented three rounds of the Encuesta Nacional de Empleo (June 1996, November 1996, and November 1997). These surveys had national coverage. The November 1997 survey is the richest in terms of content because it contains detailed modules on education and health. In March 1999, INE implemented the Encuesta Continua de Hogares again in Bolivia s larger cities. The survey provided information on both income and, to a lesser degree, expenditures. Then, in November 1999, INE implemented the Encuesta Continua de Hogares Condiciones de Vida at the national level. This survey benefited in part from the support of the MECOVI program. The range of questions in this 1999 survey is 117

68 more comprehensive than in previous surveys due to modules on health, education, occupation, income, and expenditures. The module on expenditures has been particularly useful for future poverty monitoring. These surveys are not always comparable due to changes over time in the questionnaires and the fact that some of surveys have only been implemented in large urban areas only, making it difficult to establish national poverty trends in Bolivia in the 1990s. Some additional information for rural areas is also available in two surveys conducted in 1993 and 1997 by Bolivia s social investment fund (Fondo de Inversion Social, FIS). But these surveys are not fully representative of rural areas so results should be treated with caution. INE currently fields the Encuesta Continua de Hogares Condiciones de Vida regularly and at a national level. Its advantages are principally that instead of income, expenditures are the preferred indicator of wellbeing, and the use of the survey to compute the cost of basic food and non-food needs. Since October of 1999, Bolivia has participated in the MECOVI (Mejoramiento de las Encuestas y la Medicion de las Condiciones de Vida en America Latina y el Caribe) program coordinated jointly by CEPAL, the Inter-American Development Bank, and the World Bank. Among its aims are to improve the system of household surveys, improve the use of surveys for poverty targeting, and strengthen the institutional capacity of member countries to analyze the survey data for policy and project design. In Bolivia, MECOVI assisted INE in its efforts to create an Integrated System of Household Surveys as part of the strategy of statistical information to combat poverty. Success to Date in Achieving the Millennium Development Goals Recently, Bolivia has adopted a modified version of the Millennium Development Goals (MDGs), aligning its PRSP to a set of MDGs that best reflects its situation. The adoption of the MDGs by Bolivia and the international community has changed the results-orientation approach from an extensive and often ambiguous list of indicators to a more concrete selected set of goals and targets. The original version of the country s PRSP contains a broad range of almost fifty indicators; a revised version of the strategy identifies a selected group of twelve targets. In this way, the country has taken a first step in adopting a modified version of the MDGs by aligning its PRSP to a selection of MDGs. The United Nations Development Program (UNDP) has been regularly tracking the status of the country with respect to the MDGs (see Table 1) in conjunction with UDAPE and INE. 118

69 Table 1. Millennium Development Goals: Bolivia s status Eradicate extreme poverty and hunger: 2015 target = halve 1990 $1 a day poverty and malnutrition rates Population below $1 a day (%) Poverty gap at $1 a day (%) Percentage share of income or consumption held by poorest 20% Prevalence of child malnutrition (% of children under 5) Population below minimum level of dietary energy consumption (%) Achieve universal primary education: 2015 target = net enrollment to 100 Net primary enrollment ratio (% of relevant age group) Percentage of cohort reaching grade 5 (%) Youth literacy rate (% ages 15-24) Promote gender equality: 2005 target = education ratio to 100 Ratio of girls to boys in primary and secondary education (%) Ratio of young literate females to males (% ages 15-24) Share of women employed in the nonagricultural sector (%) Proportion of seats held by women in national parliament (%) Reduce child mortality: 2015 target = reduce 1990 under 5 mortality by two-thirds Under 5 mortality rate (per 1,000) Infant mortality rate (per 1,000 live births) Immunization, measles (% of children under 12 months) Improve maternal health: 2015 target = reduce 1990 maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) Births attended by skilled health staff (% of total) Combat HIV/AIDS, malaria and other diseases: 2015 target = halt, and begin to reverse, AIDS, etc. Prevalence of HIV, female (% ages 15-24) Contraceptive prevalence rate (% of women ages 15-49) Number of children orphaned by HIV/AIDS.... 1, Incidence of tuberculosis (per 100,000 people) Tuberculosis cases detected under DOTS (%) Ensure environmental sustainability: 2015 target = various (see notes) Forest area (% of total land area) Nationally protected areas (% of total land area) GDP per unit of energy use (PPP $ per kg oil equivalent) CO2 emissions (metric tons per capita) Access to an improved water source (% of population) Access to improved sanitation (% of population) Access to secure tenure (% of population) Develop a Global Partnership for Development: 2015 target = various (see notes) Youth unemployment rate (% of total labor force ages 15-24) Fixed line and mobile telephones (per 1,000 people) Personal computers (per 1,000 people)

70 9 General indicators Population 6.6 million 7.4 million 8.5 million 8.7 million Gross national income ($) 5.0 billion 6.5 billion 8.1 billion 7.9 billion GNI per capita ($) Adult literacy rate (% of people ages 15 and over) Total fertility rate (births per woman) Life expectancy at birth (years) Aid (% of GNI) External debt (% of GNI) Investment (% of GDP) Trade (% of GDP) Notes: In some cases the data are for earlier or later years than those stated. Goal 1 targets: Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day. Halve, between 1990 and 2015, the proportion of people who suffer from hunger. Goal 2 target: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling. Goal 3 target: Eliminate gender disparity in primary and secondary education preferably by 2005 and to all levels of education no later than Goal 4 target: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate. Goal 5 target: Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio. Goal 6 targets: Have halted by 2015, and begun to reverse, the spread of HIV/AIDS. Have halted by 2015, and begun to reverse, the incidence of malaria and other major diseases. Goal 7 targets: Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources. Halve, by 2015, the proportion of people without sustainable access to safe drinking water. By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers. Goal 8 targets: Develop further an open, rule-based, predictable, non-discriminatory trading and financial system. Address the Special Needs of the Least Developed Countries. Address the Special Needs of landlocked countries and small island developing states. Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term. In cooperation with developing countries, develop and implement strategies for decent and productive work for youth. In cooperation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries. In cooperation with the private sector, make available the benefits of new technologies, especially information and communications. Source: World Development Indicators database, April 2002 Progress Achieved in Introducing a Results Orientation in the Public Sector Despite the Government s increased focus on setting and tracking targets, there has been much less progress made in all the supporting activities needed to make a results-based management (RBM) system work in Bolivia. For example, there has been little connection between the setting of targets and the preparation of the ministerial annual operating plans, budgetary allocations, or the design of externally financed development programs. An RBM approach emphasizes the need to clarify the underlying cause and effect relations between actions and results. However, many agencies appear to be stuck at the conceptual level of fixing results, without putting into place practical, operatio nal systems to monitor intermediate indicators. 120

71 The findings of a UK s Development Strategies report on RBM in Bolivia 1 are revealing. The report argues that advances to date with a comprehensive results-based management approach have been limited, principally because of the difficulty of introducing public sector reform into a system where political patronage remains strong. It states that [r]esults-based public expenditure management is based on a system of performance measures, selection of targets, evaluation and verification and monitoring. However, it requires a minimally effective bureaucracy, especially in personnel management, budgeting and financial controls. The Bolivian public administration does not meet these minimum requirements. Recently, the World Bank has been active in helping the government development operational systems to track targets and monitor intermediate indicators. The progress to date is discussed in Box 2. Box 2. Attributing Outcomes to Policy Actions The World Bank has been helping the government develop a system dynamics approach as a way of developing rather complex, graphic, structural models of these dynamic relations in a given system easily and intuitively. A system dynamics approach is particularly useful since a result is rarely due to a single action. Even in simple cases, results depend on a multitude of policy actions each with its own dynamic path that affect outcomes within that system. The approach also allows for the representation of the dynamic aspects of feedback effects and time lags in a system and helps avoid the difficulty of keeping multiple dynamic relationships in one s head. It also offers important benefits for planning and for monitoring and evaluation activities. To date, the government and the World Bank have finished a model that analyzes the relations between health sector policies and underlying epidemiological risks that together determine the prevalence of malaria in the country. The model takes into account the feedback between infected individuals and the rate of transmission of the disease, as well as the actions undertaken and the government s planned strategic sector plan, and also tracks the costs and financing needs contemplated by the plan. Socioeconomic factors that affect, say, the responses by different groups to a diagnosis and treatment program can be factored into the model. Similarly, exogenous factors that may affect the outcome, but may not be amenable to public policy, can be incorporated. Progress has also been made in modeling the relation between policy actions and infant mortality and infectious disease outcomes. Finally, there is an effort underway to analyze the relations between educational policy decisions and outcomes. C. Country Development Results and CAS Outcomes The previous CAS proposed a set of core outcome benchmarks to help guide, monitor and evaluate the implementation of the CAS during the coming five years. Table 2 presents the targets as originally proposed and the actual values of the benchmarks in Carlos Montes. Development Strategies: Results-Based Public Management in Bolivia. Working Paper 202. February

72 Table 2. Proposed 1998-CAS Core Benchmarks CAS Benchmarks CAS Benchmarks Low Case Scenario Actual Country Performance Poverty Headcount Ratio ( percent) a Poverty Gap Ratio ( percent) b Prevalence of Child Malnutrition ( percent of children under five) c Infant Mortality Rate (per 1,000 live births) d n.a. 66 Maternal Mortality Rate (per 100,000 live n.a. n.a. births) e Notes: a Number of persons below the poverty line as a percent of total population. b Mean shortfall below the poverty line expressed as a percent of the poverty line. c Percent of children under five whose weight by age is less than minus two standard deviations from the median of the reference population. d Number of deaths of infants under one year of age, per 1,000 live births. e Number of women who die during pregnancy and childbirth, per 100,000 live births. n.a. not available Clearly, the CAS benchmarks were not met. Although the FY98 FY02 CAS stated that the effectiveness of the CAS should be judged by its ability to deliver the desired poverty reduction results, it is unlikely that the poor outcomes can be attributed to the World Bank. The lack of progress in the core CAS benchmarks is largely due to the difficult economic situation that Bolivia has gone through over the last five years. During the late 1990s and early 2000, Bolivia was hit by external and internal shocks that led to lower growth rates and stressed the private and public sectors. The last five years have been years of low growth, stagnation in poverty reduction and increasing social conflict. There were several external factors that turned unfavourable beginning in The Russian crisis and the devaluation of the Brazilian real led to a sudden stop of capital inflows and capital outflows in emerging markets, decelerating growth, particularly among Bolivia s trading partners, leading to less demand for Bolivian exports. 2 The Argentinean crisis of 2001, involving curtailment of credit and a sharp devaluation of the Argentine currency reduced Bolivian exports to Argentina, increased competition in the domestic market from cheap Argentine imports, and diminished remittances from Bolivian workers in Argentina. When the external environment turned unfavourable in 1998, banks, and in particular foreign banks that had recently acquired local banks, quickly reacted by reducing and restructuring their portfolios. The effects of these external shocks were compounded by internal shocks caused by the eradication of coca crops, an aggressive campaign against smuggling as part of the Customs Reform which was supported by the Bank and by adverse weather shocks. The worsening 2 World Bank analysis shows a high correlation between the cyclical growth component of Bolivia and its Andean trading partners. The analysis also shows a high correlation between Bolivia s growth and that of Argentina and Brazil. These results suggest there are two sources of shocks that affect Bolivia a direct shock that lowers growth in Bolivia and an indirect shock that lowers growth in trading partners that leads to lower demand for Bolivian exports. The systemic drop in capital inflows to the LAC region in the late 1990s could explain the strong change in Bolivia s growth. 122

73 economic situation has been exacerbated by an escalating trend of social conflicts that emerged in early 2000 and continues today. The net effect of these economic shocks and social conflict was a drop in the rate of growth from 5.03 percent in 1998 to 2.8 percent in 2002 and an increase in poverty rates from 60 to 64 percent between 1999 and By the end of the 1990s, the fiscal situation had deteriorated due to the lag in growth and subsequent drop in tax revenues. The difficulties the public sector faced were shared by the corporate and financial sectors, as reflected in their negative performance indicators. Table 3 demonstrates that the actual economic performance of key economic indicators turned out worse than even CAS low case scenario projections. Table 3. Key Economic Variables (in percentages) 1998 CAS Projections (Low Case Scenario) Actual Real growth rate GDP GDP per capita Private consumption per capita Exports of goods Share of GDP Gross Domestic Investment Gross National Saving Current Account Balance NFPS Balance Other Inflation (CPI eop percent) Gross reserves in month of imports Total external debt / GDP (a) Total external debt service / exports (a) Note: (a) Include public and publicly guaranteed debt, private non-guaranteed, use of IMF credits and net short term capital In addition to the core CAS benchmarks, the 1998 CAS presented a program matrix that contained an exhaustive list of country performance indicators and World Bank Group selfevaluation indicators that were intended to be used to track progress, not only for the World Bank, but also for donors and the Government. This matrix turned out to be quickly supplanted by a reduced set of core and complementary indicators developed jointly by the Government and donors that were reviewed during the CG meetings. Although Country Performance Indicators in the CAS Program Matrix received very little follow-up because they were so soon replaced by a different set, Attachment Table 1 attempts to report on progress towards meeting the original targets. In retrospect, the task of comparing actual outcomes to the targets proved exceedingly difficult. Many targets were not quantified. Others were difficult to measure. Some can only be measured with census data that is reported every 10 years. Moreover, because the Government and donors chose to track a different set of country performance indicators, the country performance indicators in the CAS Program Matrix 123

74 were not actively tracked and the Bank indicators were not updated when the nature of the lending program changed. Based on what could be reviewed, the performance in meeting targets was decidedly mixed. In the equity area, many of the targets were met. A greater emphasis on social policies was followed by a greater allocation of resources and an observed impact on social indicators. Social expenditure increased from 15.7 percent of GDP in 1998 to 19.6 percent in 2002, and the efficiency and quality of social services improved as well. The introduction and implementation of the health reform has led to an important increase in coverage across priority indicators i.e. births attended by trained personnel, complete pre- natal care attendance, administration of DPT/Pentavalent vaccine. Indeed, the impact of the Bank s assistance in the health sector has been remarkable. In the education sector, the impact of the Bank s assistance has also been strong. Drawing upon advances made by the previous administration, the Government managed to push forward a transformation of both the institutional and technical-pedagogical aspects of the education system. Net primary coverage has reached 96.4 percent and the primary completion rate reached 72.7 percent with an annual increase of two percentage points per year, placing Bolivia on track to achieve universal primary education by However, on the macro front, over the last CAS period the Bank underestimated the limited ability of the economy to withstand shocks. Moreover, the fiscal imbalance was reinforced by the deterioration of the banking and corporate sectors, which added to the problems created by the pension system reform, putting the fiscal framework on a non-sustainable, explosive path. Finally, the objective of poverty reduction was not achieved, and the system of safety nets proved inflexible and unable to protect the most vulnerable groups in the events of unexpected shocks. While the Bank carried out a useful study on the microeconomic constraints to growth, the lending program over the past CAS period did not address the bottlenecks that impede higher growth. With regard to institutional reforms and decentralization, achievements are mixed. There was progress in consolidating reforms in three key public agencies: the National Customs Service, the Tax Services and the National Roads Service. Between 1998 and 2001, tax revenues collected by the Tax Service increased from 7.48 percent to 10.9 percent of GDP and, during the same period, more than 20,000 public employees in the upper and middle levels of government presented a sworn statement of their personal goods. In the judicial sector, important laws were approved to deal with criminal procedures and the civil code. A Civil Service Statute was approved and a Civil Service Superintendency was created. SIGMA an integrated financial management system has been implemented in the whole central administration and will be soon implemented at the departmental and municipal levels. There remains, however, important aspects of both SIGMA and the PRI that are still pending, including extending the implementation of SIGMA to Municipalities and Prefectures that will require further evaluation to determine their financial, technical, and institutional sustainability over time. Institutional reforms succeeded in three key autonomous agencies (national roads, customs and tax services), however, the core of the public sector remains largely unreformed and still suffers from deep institutional weakness. Taking into account institutional constraints within the judicial branch, the Bank decided to drop its support aimed at strengthening the judicial system. 124

75 Regarding decentralization, the WBG plays, through the CAS and its lending instruments, an important role to unify donor support to the area of fiscal and administrative decentralization in Bolivia. There are three important lessons that can be learned from the experience to date. First, while implementation of the program supported by specific operation (e.g. the PSAC-I) has been, in general, satisfactory, and basic institutional arrangements for decentralization established at the outset of the program are in place, continued efforts are needed in the areas of reinforcing the incentive structure and system of administrative controls to address the core aspects of the decentralization process, including the need for fiscal discipline, clear lines of responsibility among the levels of public administration, and the involvement of civil society stakeholders in the delivery and oversight of services at the local level. The programmatic adjustment approach provides a good instrument for continuing such support. Second, the new government is using the flexibility of the programmatic approach to improve the institutional arrangements for decentralization including establishing the Comité de Análisis de Descentralización (CAD) and rethinking the role of the FPS and provide the basis for the soon-to-be finalized National Decentralization Strategy. Third, the centrality of decentralization within the Bolivian Poverty Reduction Strategy and the challenges inherent to operations with multiple partners and government stakeholders require a high level of donor and WBG coordination and intense supervision of the government s decentralization program. IFC Accomplishments since last CAS Despite the adverse social and economic conditions that prevailed during the past few years, the implementation of IFC s strategy has been strong in supporting the Bolivian private sector during one of the most difficult periods in recent history. The 1998 CAS/PSS articulated IFC s main areas of focus: (i) financial sector development; (ii) support for SMEs and microenterprises through financial intermediaries; (iii) private infrastructure; (iv) support for general industry, including export-oriented enterprises in manufacturing, gas, and mining; and (v) non- investment activity to improve the business environment. As of October 31, 2003, IFC s portfolio (outstanding loans, syndicated loans and equity) stood at US$105 million. Three-quarters of the portfolio consisted of infrastructure projects, including transportation, power, water infrastructure, and telecommunications, while the rest consisted of the financial sector, mining, and chemicals. IFC s support has been strong relative to the size of the economy. During FY99 FY04 (through October 2003), IFC committed to financing for 12 projects for US$132 million, including syndications, focusing on the IFC s CAS priority areas and following on the Bank s work in the relevant sectors. The relatively small size of projects in the industrial sector has been a constraint for direct IFC investment. By providing six credit lines (including the four new lines approved in FY03) in the financial sector for non-lending to SMEs and microenterprises, IFC has been able on a wholesale basis to reach smaller companies while supporting financial institutions. Support for private infrastructure has been provided through projects in electricity, soybean-shipping port, railway, telecommunications, and water and sanitation, capitalizing on the early gains in Bank supported regulatory reform. The river port project, combined with the privatized railway (through an IFCsupported railway project in Chile) from Santa Cruz to Puerto Suarez, is supporting shipment of increased soybean production thereby revitalizing the rural economy. FIAS provided assistance in regulatory and administrative barriers to investment, and the Bank-IFC joint SME Department carried out an SME mapping a study for diagnosing and addressing existing constraints to 125

76 SME development. This study combined with the Bank s Microeconomic Constraints study are now feeding into several initiatives to have a more targeted and efficient approach to provide assistance to microenterprises and SMEs. Building partly on these works, IFC launched a regional SME Facility approved by the Board in June 2003 to provide technical assistance and capacity building programs for microenterprises and SMEs, initially covering Bolivia, Peru, Honduras and Nicaragua. D. Measuring Bank Performance Portfolio Assessment Between FY98 FY02 there has been a rationalization of the Bank s portfolio. The number of projects decreased from 21 in FY98 to 17 as of October Between FY99 and FY01, there was a sharp deterioration in the quality of the portfolio. As of end-fy01 Bolivia had 35 percent of its commitments at risk (compared to 7 percent as of end-fy99) and had 24 percent of its projects at risk. As a result of the increase in the riskiness of the portfolio, in FY02 Bolivia was added to the list of PIP (Portfolio Improvement Program) countries, subject to intensive portfolio monitoring and supervision. Between August 2001 and June 2002, bi- monthly follow-up Country Portfolio Performance Reviews took place in Bolivia. An action plan identifying critical steps, responsible unit/sector and target dates was prepared. It focused on restructuring some problem projects, ensuring the availability of counterpart funds, monitoring bidding processes, tracking overall disbursements and carrying out some project-specific actions. Five quantitative benchmarks and targets related to portfolio monitoring indicators were set for FY02. One year later, a strong improvement in portfolio indicators was followed by the removal of the country from the improvement program. Bolivia s portfolio performance went beyond the targets set under the PIP. In FY02, the percentage of commitments at risk were less than half the target of 20 percent established in the action plan, while the percentage of projects at risk dropped from 24 percent in FY01 to 11 percent in FY02 and the proactivity index increased from 0 to 100 percent. Table 4 presents a comparative view of the portfolio performance over the last CAS period. There has been a deterioration of the portfolio in FY03, with a sharp increase in the number of risk flags from 7 in FY02 to 28 in FY03 (40 percent are related to procurement and project management). 126

77 Table 4. Portfolio Monitoring Indicators FY98 FY99 FY00 FY01 FY02 FY03 No. of projects No. (%) of projects at 6 (28.6) 2 (11.1) 2 (12.5) 4 (23.5) 2 (11.1) 3 (17.6) risk Net commitments (US$) US$ (%) of commitments at risk (28.4) 45.4 (6.9) 52.8 (8.9) (35.0) 64.3 (9.7) (18.7) Realism Index (%) a Proactivity Index (%) b Overage projects No. (%) Field managed (12.5) 5 (29.4) 10 (55.6) 8 (47.1) No. (%) HQ managed (87.5) 12 (70.6) 8 (44.4) 9 (52.9) No. of risk flags a Percent of projects rated as unsatisfactory on DO and/or IP to projects at risk. b Percent of projects rated as problem projects 12 months earlier that have since been restructured, closed or upgraded. Quality of Products and Services OED evaluated 21 projects that exited between FY98 and FY03. Regarding Bank performance, about 81 percent of the projects evaluated are rated as satisfactory, only one of the projects has a highly satisfactory record and three were rated unsatisfactory. Regarding portfolio management, Bolivia projects were only part of the sample in 2000 for Quality at Entry Assessment (QEA), both projects were rated satisfactory at entry. Results are encouraging, but it is worth mention that during FY03 (not reflected in Table 5) one Bolivia project was sampled for QEA and received only a marginally satisfactory rating. Between FY97 and FY03, ten projects were selected for a Quality at Supervision Assessment and in FY01 two projects were evaluated as part of the Quality at Supervision of risky projects, 82 percent were satisfactorily supervised. Table 5 and Table 6 summarize the assessment of these projects. Table 5. Quality at Entry Assessment, FY97-02 No. of projects 2 Overall Assessment (%satisfactory) 100 R1 Strategic relevance and approach (%satisfactory) 100 R2 Structural, financial and macroeconomic aspects 46 (%satisfactory) R3 Poverty and social aspects (%satisfactory) 100 R4 Environmental aspects (%satisfactory) 100 R5 Fiduciary aspects (%satisfactory) 100 R6 Policy and institutional aspects (%satisfactory) 100 R7 Implementation arrangements (%satisfactory) 100 R8 Risk assessment (%satisfactory) 100 R9 Bank inputs and processes (%satisfactory)

78 Table 6. Quality of Supervision, FY97-02 (Overall Result) No. of projects 10 Overall Assessment (%satisfactory) 82 R1 Focus on Development 91 Effectiveness (%satisfactory) R2 Supervision of 82 Fiduciary/Safeguard Aspects (%satisfactory) R3 Adequacy of Supervis ion Inputs 82 and Processes (%satisfactory) R4 Quality and Realism of Reporting 84 (%satisfactory) Delivery Approvals over the entire FY99 FY02 period equalled US$373 million, which lies between the base case of US$325 million and the high case of US$450 of the 1998 CAS. It is worth noting that the nature of the projects changed somewhat over the course of the CAS period from what had been planned at the beginning of the period. Table 7 compares actual to planned projects, it can be clearly seen that a number of projects were dropped or delayed. In fact, only five of the 18 proposed projects were actually carried out, reflecting the adaptation of the Bank s program of support to the economic, social and political circumstances faced by the country. For instance, the series of municipal development projects were replaced by a series of PSACs in decentralization in order to tackle issues within the whole system of decentralization instead of providing support to stand-alone municipal projects. Similarly, a Judicial Reform project was dropped in face of political constraints and a Secondary and Higher Education Reform project was dropped due to difficulties in carrying out two major reforms in the education sector the Education Reform Program was being implemented in primary. The introduction of a Social Safety Net SAC in FY03 responded to the urgent need to provide immediate response to the current social and economic crisis in Bolivia. It helped the Government to close a financing gap in 2003 while guaranteeing the provision of basic social services during the period of fiscal adjustment. The approval of only one project for US$5 million in fiscal year 2000 stands out. This occurred as the result of an explicit decision by the Bank not to go forward with additional projects until the Government proceeded with the institutionalization of the National Road Service. This decision reflects the seriousness that Bank attached to institutional development with the launching of the CDF. Other changes included: (i) the replacement of a proposed series of investment projects in municipal development for a far-ranging Programmatic Structural Adjustment Credit in decentralization; (ii) dropping a secondary and higher education standalone project in favour of modifying the existing Education Reform project to incorporate a program of initial reforms in higher education (given resistance to higher education reforms within the universities, this approach was adopted to promote a low-key, home-grown demand for change); (iii) dropping a Judicial Reform project and two other institutional reform projects, given the difficulties in obtaining progress in this area; (iv) replacing two stand-alone highway projects with a single road rehabilitation and maintenance project because it was felt that this project was likely to have greater impact; and (v) dropping two rural investment projects as a 128

79 result of experiences with corruption in the Fondo de Desarrollo Campesino, one of the main executing agencies for rural development. The planned lending program for FY03 was presented to the Board in the CAS Progress Report of May The actual lending program for FY03 departed from the original plans because of the need to respond to the economic, political and social crisis that had been building over the last several years and which came to a head in the violent protests in February In particular, the Social Protection Project was designed to protect essential social expenditures, especially those directed to alleviate the short-term hardships faced by the poor. Table 7. Actual to Planned Projects CAS Proposal/New 1/ US$ US$ Actual (mill (mill) Objective FY99 Institutional Reform APL CAS c/ Reg. Reform and Priv. SAC CAS a/ c/ Abapo-Camiri Highway CAS a/ Health Reform APL CAS b/ FY00 Municipal Develop. II APL CAS 20 Replaced by PSAC FY01 c/ Support to Judicial System CAS 20 Dropped c/ SJ-Pto. Suarez Highway CAS 65 Dropped a/ Indigenous People s LIL CAS 5 Delayed to FY01 5 b/ Hydrocarbon LIL new 5 5 a/ FY01 Health Sector Reform II APL CAS b/ Second. & Higher Ed Reform CAS 20 Dropped b/ Yacuno-San Borja Highway CAS 15 Dropped a/ Private Provision of Infrastruc. CAS 40 Dropped a/ Decentralization PSAC new c/ FY02 Participat. Rural Invest. APL CAS 30 Dropped b/ Municipal Develop. III APL CAS 20 Replaced by PSAC II FY03 c/ Institutional Reform APL CAS 20 Delayed indefinitely c/ Land Administration- new 6 6 a/ Supplement Road Rehabilitation & Maintenance new a/ FY03 Poverty Reduction SACI CAS 50 Delayed b/ Institutional Reform APL II CAS 25 Delayed indefinitely c/ Rural Investment CAS 25 Dropped b/ Decentralization PSAC II new c/ Social Safety Net SAC new b/ Decent. Infrast. Rural Transf. new a/ b/ Total 773 Total 453 Notes:1/In support of pillars: a/ opportunity, b/ equity, and c/ institutionality (sic) Source: Compiled by OED from CAS ; CAS Progress Report of May 2001 for FY2003; Controllers Department on actual loans. High case scenario for

80 Appropriateness of Instruments and Fiduciary Issues The use of APLs was appropriate given the strong emphasis on long-term institutional reform. LILs are being used effectively to test new approaches (Indigenous People Development) and to address specific issues in sectors where the Bank has limited interventions (Hydrocarbons). Significant attention was given to fiduciary issues. The results of the CFAA and the CPAR were included as benchmarks of an adjustment operation (PSAC I). E. Consultation Over the last CAS period the Bank s program of support was entirely aligned with the government s development plan, first to the National Action Plan and later to the country s PRSP. Both of them resulted from broad consultation processes, the First and Second National Dialogues, respectively. This section will discuss the government s efforts to move towards more open and participatory policy planning. In 1997, the Government convened National Dialogues that brought together different sectors of society to discuss Government plans and public policy objectives. Subsequent and successive rounds of this National Dialogue were envisioned; each expected to build upon the results of the previous rounds. In October of 1997, the Government convened the First National Dialogue that brought together representatives from the business community, the church, civil society organizations, labor groups, NGOs, and universities, with the Government and opposition parties also participating. Despite some shortcomings, the dialogue produced various positive outcomes and resulted in agreements to support a program to reduce poverty and boost economic growth. This led to the National Action Plan mentioned in previous sections. Against this backdrop, the Government prioritized social spending and began implementing programs aimed at alleviating poverty and improving the living conditions of the population. Although the Government made substantial efforts to implement this strategy, little follow-up was done before the inauguration of the second National Dialogue in A multi-disciplinary group was also convened to work on a proposal to fight poverty. In September of 1998, the group published a document identifying actions to fight the root causes of poverty and underdevelopment. The document noted that the main assurance that these actions would be implemented was the capacity of Bolivian society to take responsibility for carrying them out (an idea that became a principal objective of the second National Dialogue in 2000). The Second National Dialogue was launched in April of 2000 to promote a participatory approach in the preparation of Bolivia s PRSP. In the months preceding the dialogue, various civil society groups mobilized on their own to prepare their own dialogues. This included the catholic church-sponsored jubilee 2000 forum of NGOs and included groups representing small producers, indigenous people and miners. The Second National Dialogue was designed as a bottom-up process with discussions taking place first at the municipal level, and then moving to the regional and national levels. 3 Four topics were discussed at the municipal roundtables: determinants of poverty, mechanisms for the allocation of HIPC debt relief resources, citizens 3. A total of 1,215 people from 314 municipalities participated in the municipal roundtables, while there were 935 people in the departmental roundtables and 273 people in the national roundtable. 130

81 participation in monitoring the use of HIPC resources, and carrying out a follow-up of the national dialogue. The nine departmental roundtables included delegates from each of the municipal roundtables, as well as representatives from the government, civil society and the Jubilee 2000 forum of NGOs. But high-level government participation in these departmental roundtables was limited, with government officials present at only three of the nine roundtables. The meetings focused on priority actions at the regional level in the fight against poverty, as well as citizens participation in the monitoring of resources for public investment, the content and institutional framework of public policies, and conducting a follow-up of the National Dialogue. In August of 2000, delegates from the municipal and departmental roundtables attended the national dialogue with the attendance of government ministers and vice-ministers as well as representatives of civil society. However, representation of political parties and the legislature was very low. Six sectoral topics were discussed: support to production, education, health, basic sanitation and housing, land, and the environment. Some structural issues were also discussed including tax policy, labor reform, trade policy, and the regulatory environment for businesses. Agreements were reached on several topics, including: (i) the determination of priority policy areas (such as productive infrastructure and support for production, education, health, and land tenure); (ii) the definition of a mechanism for the distribution of HIPC resources; and (iii) the need to establish social oversight mechanisms which would give civil society a role in monitoring the utilization of HIPC resources. The Government drafted the PRSP based on the results of the Second National Dialogue. The document was shared with the general public, followed by public discussions of the draft. As a result, the document was revised in several areas to include a more extensive analysis of indigenous, gender, and environmental issues. Plans were then made for an extensive follow-up to the PRSP through existing mechanisms of social oversight at the municipal level, and through newly created agencies of social oversight at the departmental and national levels. This entire review process was formalized in the new National Dialogue Law (Ley de Dialogo Nacional). But despite these efforts to bring the participatory process closer to people by decentralizing it, NGOs and civil society groups raised various concerns over whether: (i) some consultations were unduly influenced by local decision- makers; (ii) vulnerable groups were under-represented (specifically women and indigenous people); (iii) the highly structured methodology used failed to promote real participation; and (iv) the agenda of the discussions was not sufficiently flexible. Nevertheless, most observers agreed that the Government made a good faith effort at utilizing a participatory approach in developing its strategy and laid the groundwork for an on-going participatory process for monitoring its strategy. F. Coordination With regards to donor coordination and partnership, there have been important advances over the last years. The Consultative Group meetings, the introduction of the government s Nuevo Marco de Relacionamiento entre el Gobierno y la Cooperación Internacional, the CDF, and specificsector practices have all improved donor coordination. Over the past CAS period there have been important efforts aimed at increasing coordination among donors. An effective in-country forum for partner coordination was temporarily in place, and donor assistance programs were aligned with the country National Action Plan. The system of donor coordination functioned in such a way that one aid agency had to be elected to represent the donor community and to work with a 131

82 representative of the Government in each one of the four pillars. Government participation in donor-government Consultative Group meetings increased, and steps have been taken in moving away from traditional donor-driven and freestanding projects toward broader sector wide approaches that support national goals. The introduction of the CDF allowed the Bank to play an important role in the donor coordination effort. In supporting the implementation of country programs, the Bank worked closely with other donors. The extensive use of co-financing and technical assistance trust funds has strongly supported the CAS implementation. In FY03 TF disbursements of $20.5 million placed Bolivia as the biggest country user of trust funds in the Region. Similarly, there have been several good practices in co-financing and joint coordination of supervision. For instance, the Institutional Reform Program was jointly prepared between the Government and a group of donors, while there were joint supervision missions of the Education Reform Project. But despite these major advances, the assistance of the donor community is still disperse and fragmented, and efforts at rationalizing overlapping investments and harmonizing operational practices are still pending. 132

83 Diagnostic Positive Variables Popular participation and administrative decentralization Pension reform Sectoral reforms (telecommunications, energy, mining, aviation, railway) Stabilization policies (monetary and fiscal policy) Coordination of international cooperation External debt management Institutions working to develop microenterprises Central Bank reform Liberalization and trade integration Bolivia - Brazil Gas Pipeline Education Reform Variables to Improve Maintenance of infrastructure Human development and technology Cost of transportation Rural development Capacity to invest in infrastructure Under/un-employment - productivity - labor market Public expenditures - current - investment Strategic Objectives Improve physical and productive infrastructure Strategies Increase and maintain physical and productive infrastructure and the capacity of the public and private sectors to manage it Strengthen the regulatory framework and promote private participation Attachment Table 1. Results of the 1998 CAS Program Matrix AREA: OPPORTUNITY OVERALL OBJECTIVE: Higher rates of sustainable economic growth Country Performance Indicators Increase private investment in infrastructure / GDP Increase % volume of international trade transported by road Increase the coverage of services for municipal sanitation, electric energy and irrigation Increase the number of people with access to potable water 1000 village with telephone connection by Improvement in coverage (8 per 100) and efficiency in local network service Mainstream environmental/social safeguards in infrastructure projects, especially new roads Increase foreign direct investment / GDP Increase private investment / GDP Increase Revenues to treasury from privatization Over US$ 1.5 billion in infrastructure investments from private sector by 2002 Gas exports to increase [x] in World Bank Group Self-Evaluation Indicators Kms. of roads under satisfactory maintenance Bank s FY KM 1,000 2,000 3,500 5,000 7,000 (100%) Kms. of road completed: 160 km (Abopó- Camiri) by Real annual investment in road: US$ 100 million (Total) Kms. of rural secondary roads rehabilitated Bank s FY KM (100%) Kms. of roads under concessions: 500km by FY 2003 Rural Infrastructure, Water and Sanitation Indicators: see Equity section of matrix Hydrocarbons Privatization of refineries, domestic gas pipeline, manufacturing and gas stations Existence and application of a modern regulatory framework in each sector to promote private participation in infrastructure General Superintendencies and Sectoral superintendencies to be fully staffed and well trained Results of the independent fiscalization exercise Passage of Administrative Procedures Law that defines procedures, and reduces the time and discretion involved in appealing regulatory decisions Negotiated and approved implementation strategies for pollution control regulation Progress Country Performance Indicators: Private investment as a percentage of GPD decreased from 17% in 1998 to 10% in 2002 due decreases in Foreign Direct Investment and domestic private investment. The percentage of international trade transported by road did not have a significant change in the period The share of imports transported by road increased from 66.7% in 1997 to 71% in While the share of exports transported by road decreased from 44% in to 32% in 2001 due oil pipe line, fluvial and railway increases. World Bank Group Self-Evaluation Indicators: The ending of Abopó-Camiri was postponed until June Contracts are currently under execution but physical progress reached 19.33%. A Supreme Decree that allow for the privatization and concession of natural gas distribution networks was approved by CONAPE. Liquid gas bottling plans have not been privatized. The Government signed an agreement with the Union de Federaciones de Trabajadores Petroleros that will allow for the transfer of 33 retail gasoline stations. The agreement is currently being revised by Congress. Country Performance Indicators: Foreign Direct Investment increased from 11.3% of GDP in 1998 to 12.6% in 2002 (however it was below 10% during the period). The increase in 2002 is mainly explained by the hydrocarbons sector (Yacuiba - Rio Grande pipeline). Private investment as a percentage of GDP fell from 17% in 1998 to 10% in Gas exports increased from US$ 57.3 million in 1998 to US$263.8 million in World Bank Group Self-Evaluation Indicators: The designation of sectoral superintendents by two thirds of Congress votes is still pending. Staff working at the general and sectoral superintendencies is fully trained. 133

84 AREA: OPPORTUNITY OVERALL OBJECTIVE: Higher rates of sustainable economic growth Diagnostic Civil service reform Administration and tax policy Legislation and financial regulation Regulatory institutions Implementation of decentralization Privatization (YPFB, Vinto, etc.) Administration of justice Development of microenterprises Savings and investment (total, public, private, internal and external) Strategic Objectives Increase the quality and quantity of investment Strategies Strengthen the fiscal system Develop capital and insurance market Resolve the financial deficit in the pension system Country Performance Indicators Increase market capital and number of firms listed Credit to the private sector/gdp to increase in a sustainable manner Absolute growth in credit to smaller enterprises Number of deposits / population increase Reduction in the intermediation margin due to efficiency gain from 1998 average level (6 point) Number of persons covered by the pension system increased to 350,000 by 2002 Amount of assets under management of insurance and pension funds increases by US$ 100 million each year from World Bank Group Self-Evaluation Indicators Passage of new banking legislation and regularizations that improve supervision and soundness of the system Regularizations for Insurance and Capital Market Laws Strengthened, independent regulatory institutions to improve supervisions capacity in banking, pension, securities and insurance Active liquidation of assets of the former complementary pensions funds: Complementary funds liquidated end 1999 : six end 2000 : ten end 2002 : remaining twenty Progress Country Performance Indicators: Monetary system credit to private sector remained at the same level (55% of GDP) between 1998 and 1999, and then decreased to 42% in Micro-credit levels increased to US$ 284% million in May 2002 from US$ 185 in Number of deposits in the banking system as a percentage of total population increased from 9.9% in 1998 to 10.2% in People covered by the pension system stood at 760,959 in World Bank Group Self-Evaluation Indicators: The Fortalecimiento de la Normativa y Supervisión Financiera was enacted in December The Capital Market Law (Law 1834) and Security Law (Law 1883) were enacted in March 1998 and July 1998, respectively. Promote savings Increase internal savings/gdp Increase in the resources managed by FFP/number of people below the system of AFP/% labor force in AFP Issuance of the Capital Market and Insurance Laws Increase collections of internal taxes, trade taxes and efficiency of Government expenditure Reduction in the relative burden of indirect taxes Strengthening of financial NGOs and saving cooperatives and loans. Country Performance Indicators: Gross domestic saving decreased from 12.6% of GDP in 1997 to 9.6% in World Bank Group Self-Evaluation Indicators: AFPs stock of contributions increased from 1.5% of GDP in 1997 to 13.3% of GDP in The number of people covered by the new pension system increased to 760,959 in 2002 from 328,884 in Internal tax revenues increased to 16.9% of GDP in 2002 from 14.4% in But excluding taxes on hydrocarbons, tax revenues only increased from 11.3% of GDP in 1997 to 12.2% in Tax collections from international trade decreased to 1.1% of GDP in 2002 from 1.4% in The cost of the pension reform rose from 2.5% of GDP in 1997 to 5% in 2002 and the fiscal deficit increased from 3.4% of GDP in 1998 to 8.6% in There is no significant change in the tax structure and relative indirect taxes burden did not decrease. Judicial Reform Reduction in the time to obtain decisions and execute decisions Loans with movable assets as collateral as a base Reduction in the time/execution of decisions World Bank Group Self-Evaluation Indicators: The regulation that will allow for collateral other than real state is still waiting for Congress approval. 134

85 AREA: OPPORTUNITY OVERALL OBJECTIVE: Higher rates of sustainable economic growth Diagnostic Strategic Objectives Increase productivity Strategies Improve the quality of human resources Improve the quality of education Incorporate adequate technologies Country Performance Indicators See Equity section of matrix, Improvement the efficiency and quality of basic social service Increase total factor productivity Incorporate EMSs in industry and mining World Bank Group Self-Evaluation Indicators See Equity section of matrix, Improvement the efficiency and quality of basic social service See Equity section of matrix, Improvement agriculture productivity and Increase the quality and quantity of investment Progress Country Performance Indicators: The Industrial Manufacture Sector Environmental Norm (RASIM) was approved in July In addition, technical regulations for the hydrocarbons sector were introduced. Rural and agricultural development Promote the activity of microenterprises Improve agricultural productivity Improve the system of land tenure Protect natural resources Volume of sales, employment, and assets of microenterprises Increase in value added in agriculture Increase in the returns per cultivated hectare Increase/rural household Increase the number of titles for land Increase the number of registries for water rights Functioning instruments in the market to provide incentives for the conservation of natural resources Increase number of protected areas with adequate an the ground management Increase capacity for environmental management Increase in number of firms certificated ISO4000 Volume of sales, employment, and assets of microenterprises Increase agricultural returns/strengthened administration of the sector Quantity of resources executed at the local level Increase in the rates of adoption of technology Increase in the level of rural savings Increase in private sector participation Increase in the investment level Increase in the number of titles granted Increase in the level of private investment Increase in the number of indigenous OTB land claims with secure title Adoption of a land use plan Increase in the demarcation of indigenous lands Use of agricultural technologies for conservation Conservation of eco-systems (number of squared km. of protected area) Reduction in the degradation of land Increase in the number of animals vaccinated Increase in the value of production Population central measure enforced Improvement natural resources management Country Performance Indicators: During the period, the average growth rate of value added in agriculture reached 1.1% percent of GDP (against 4.2% during the period). Country Performance Indicators: The SERNAP (Servicio nacional de Areas Protegidas) extended its tuition to 19 out of the 21 national protected areas. The percentage of protected areas increased from 1% of the national surface in 1991 to 16% in

86 AREA: OPPORTUNITY OVERALL OBJECTIVE: Higher rates of sustainable economic growth Diagnostic Strategic Objectives Improve the participation of the country in international markets Strategies Increase exports with greater value added traditional non-traditional Country Performance Indicators Increase in the participation of exports with greater value added Increase in the value of traditional exports Increase in the value of nontraditional exports Increase in the volume of external trade as a percent of GDP Reduction in the unit cost of production Total value of export increase by 25% between Increase in number of firms certificated ISO4000 World Bank Group Self-Evaluation Indicators Increase in the value of external trade as a percent of GDP EMSs in place for key industries Progress Country Performance Indicators: Manufacture exports as a percent of total exports remained unchanged at around 53%. The nominal value of traditional exports increased from US$ million in 1998 to in 2002, attributed to increased gas exports. The nominal value of non-traditional exports decreased from US$ million in 1997 to US$621.0 million. The value of international trade (exports plus imports) as a percentage of GDP decreased form 50.5% in 1997 to 48.8% in 2002 (it was below 46% between 1999 and 2001). Between 1998 and 2002, the growth rate of the value of exports reached 2.8%. World Bank Group Self-Evaluation Indicators: The value of international trade (exports plus imports) as a percentage of GDP decreased form 50.5% in 1997 to 48.8% in 2002 (it was below 46% between 1999 and 2001). The Industrial Manufacture Sector Environmental Norm (RASIM) was approved in July In addition, technical regulations for the hydrocarbons sector were introduced. 136

87 Diagnostic Positive Variables Efficacy of the social strategy (equity and productivity) Fight against poverty is a policy of the State, not of the government Participation (Law of Popular Participation) Analysis of poverty (indicators) Macroeconomic stability Education reform Administrative decentralization Variables to Improve Strategy for rural development (alternatives) Strategy for rural development (alternatives) Limited experience in evaluating social programs Strategic Objectives Improve the income and productivity of the poor AREA: EQUITY OVERALL OBJECTIVE: Improve Income Distribution and Inclusion (equity in opportunities) Strategies Country Performance Indicators World Bank Self-Evaluation Indicators Progress Increase rural incomes through economically attractive rural infrastructure projects (e.g., roads, irrigation, generation of electricity) Increase productive investments in indigenous areas Reorient the rural development strategy to obtain equitable access of the rural population to land and a better use of natural resources Increase percentage of agricultural production marketed (not auto-consumed) Increase coverage of services (energy, water, basic sanitation, construction of rural roads, construction and maintenance) Increase in yields per ha of staple crops in the altiplano Increase amount of public and private funds spent on research and extension towards small producers Increase in productive investment in 200 municipalities with highest proportion of indigenous population Hectares of land under cadastre and titled for small agricultural producers (by gender) Increase in community-based natural resource management projects Number of municipalities with at least one technician to assist local producers. Rural Infrastructure Indicators: Number of km of access road rehabilitation by FDC and rural roads projects. Amount invested in rural infrastructure each year: Bank s FY US$ millions Rural Water and Sanitation Indicators: # of people with access to water due to PROSABAR interventions end 1997:37,000 end 2000: 375,000 because of PROSABAR interventions: end 1997:243 end 2000: 1,200 Net increase in the irrigated area in the 200 municipalities covered by the PRIP FDC amounts invested in the 200 poorest municipalities Percentage of FDC investments for indigenous peoples and rural women Hectares of land under cadastre and titled for small agricultural producers (by gender) Hectares of indigenous land regularized World Bank Self-Evaluation Indicators: As of June 2003, 121 municipalities had a technician to assist local producers. Between 1999 and mid-2003, the total amount invested in rural infrastructure reached US$ 10,8 million, this is because the Participatory Rural Investment Project stopped disbursements in Total amount invested by the FDC between 1999 and mid-2003 stood at US$ 18 million. Country Performance Indicators: In the last six years: More than 4,000 titles were handed to property owners. 6 million of hectares were regularized. 24 million of hectares are in process of regularization. 137

88 Diagnostic Identification of (vulnerable groupsrural-urban) and establishment of priorities (sector, strategy) Strategy of equity is not integrated with the general strategy of development Strategic Objectives Improve the efficiency and quality of basic social services taking in to account the cultural conditions of the Bolivian population AREA: EQUITY OVERALL OBJECTIVE: Improve Income Distribution and Inclusion (equity in opportunities) Strategies Country Performance Indicators World Bank Self-Evaluation Indicators Progress Promote actions to increase the access to basic social services by enhancing their decentralized provision and the normative, regulatory and supervisory role of the state EDUCATION Increase average years of schooling for those leaving the system Decrease percentage of students at risk of low academic performance (3 rd grade) Decrease percentage of students at risk of low academic performance (8 th grade) Decrease absolute number of functional illiterates in population 15 and above NUTRITION Decrease percent of births with low birth weight Improve nutritional status of children 5 and under Reduce live births of low birthweight (less than 2500g) HEALTH Decrease infant mortality Decrease maternal mortality Reduce perinatal mortality Reduce deaths of children under 5 Institutional changes-organization Number of school nucleus organized Number of new pedagogical advisors trained Number of students per teacher in urban areas Increase in average years of schooling for those leaving schools in nucleus financed under WB project Percentage of students at risk of low academic performance in nucleus financed under WB project Flow into the Educational System Number of children benefiting from PAN program Number of children who are rated as normal or mildly malnourished upon leaving the program Increase births attended by skilled health personnel (excluding trained and untrained traditional birth attendants) Increase number of women attended at least once during pregnancy, by skilled health personnel (excluding trained and untrained traditional birth attendants) for reasons related to pregnancy Increase number of facilities with functioning basic essential obstetric care per 500,000 population Decrease percent of population of children under 5 at risk for respiratory infections Increase the number of children under 5 with complete vaccinations Increase the number of beneficiaries under public insurance schemes Decrease number of pregnant women in endemic areas controlled for Chagas Country Performance Indicators: EDUCATION: Functional illiterate rate in population 15 and above decreased from 36.1% in 1992 to 26.9% in The average years of schooling for those over 19 increased from 6.06 in 1992 to 7.43 in NUTRITION: The percentage of births with low birth weight decreased from 6.1% in 1998 to 5.9% in The prevalence of child malnutrition as a percentage of children under five decreas ed from 10% in 1997 to 7.35% in HEALTH: Infant mortality rate decreased from 67 per 1,000 live births in 1998 (ENDSA) to 66 per 1,000 live births in 2001 (CNPV). Maternal mortality decreased from 390 per 100,000 live births in 1994 (ENDSA) to 234 per 100,000 live births in 2001 (post-census survey) World Bank Self-Evaluation Indicators: HEALTH: Coverage of births attended by skilled personnel increased from 42% in 1998 to 54% in Coverage of fourth pre-natal control increased from 30% in 1998 to 34% in Coverage of DPT/Pentavalente in children under 1 increased from 77% in 1998 to 100% in Strengthen the capacity of local governments and the process of participatory planning Number of municipalities with development plans developed in a participatory manner Annual implementation rate of municipal investment programs increases from 50% to 65% Real annual increase of 3% in the own revenues of municipalities Increase in percentage of investment executed according to priorities defined by Over 5 years the annual implementation rate of the municipal investment program increases from 63% to 80% in the 200 project municipalities Real annual increase of 5% in own revenues of participating municipalities Number of municipalities capable of designing and managing infrastructure investment projects increases from 30 to

89 Diagnostic Strategic Objectives AREA: EQUITY OVERALL OBJECTIVE: Improve Income Distribution and Inclusion (equity in opportunities) Strategies Country Performance Indicators World Bank Self-Evaluation Indicators Progress Promote the development of community actions (empowerment) to improve the quality of the programs in accord with basic needs and priorities Reorient and increase public expenditures targeted to groups currently excluded from the benefits of development. the communities Number of municipalities with municipal education plans Increase co-financing resources provided by the community Follow up actions and evaluations (participation of NGOs) Increase % share of health expenditures/gdp Increase % share of education expenditures/gdp Reduce % share of public university to total budget Increase percentage of expenditures on education by municipalities Number of indigenous district development plans increases to 43 by the year 2000 Client satisfaction with planning process (as indicated by a survey of Comites de Vigilancia) The annual number of subprojects implemented directly by communities increases from 10 to 100 in 5 years Percentage of proyectos educativos rated as acceptable by evaluation committee of MECD/FIS Client satisfaction with participatory process (as revealed by survey of juntas escolares) Government programmed counterpart funds for the education, health and child development projects fulfilled on an annual basis Country Performance Indicators: Health expenditure as a percentage of GDP increased from 3.1% in 1998 to 3.6% in Education expenditure as a percentage of GDP increased from 5.7% in 1998 to 7.2% in Public expenditure in universities as a percentage of current expenditure in education increased from 21% in 1998 to 22.5% in Public expenditure in universities as a percentage of public expenditure increased from 3.3% in 1998 to 3.8% in Improve the access of services to excluded parts of the population and define priorities for attention Design demand-oriented social programs focused on gender and all excluded groups Same educational indicators as above presented separately by gender, and by municipalities with greatest number of indigenous population Same health indicators as above presented separately by gender, and by municipalities with greatest number of indigenous population Number of funded health subprojects in predominantly indigenous areas increased Country Performance Indicators: EDUCATION: Functional illiterate rate for women 15 and above decreased from 43.31% in 1992 to 33.6% in 2001, while for men decreased from 28.49% to 19.82%. Functional illiterate rate in population 15 and above in rural areas decreased from 55.5% in 1992 to 47.21% in 2001, while for those living in urban areas decreased from 23% to 15.79%. The average years of schooling for women over 19 increased from 5.23 in 1992 to 6.65 in 2001, while for men over 19 increased from 6.95 to 8.24 during the same period. The average years of schooling for those over 19 in urban areas increased from 7.92 in 1992 to 9.23 in 2001, while for those living in rural areas increased from 3.38 in 1992 to

90 Diagnostic Strategic Objectives AREA: EQUITY OVERALL OBJECTIVE: Improve Income Distribution and Inclusion (equity in opportunities) Strategies Country Performance Indicators World Bank Self-Evaluation Indicators Progress Design specific programs oriented to reduce extreme poverty Decrease in Poverty Gap Reduction of the population in extreme poverty Investments in infrastructure and social services in municipalities in extreme poverty Increase in the coverage of health, education, energy, water and basic sanitation in areas of extreme poverty Improve social indicators in areas of extreme poverty (e.g., morbidity rates, mortality rates, etc.) Same education indicators as above presented separately for poorest 1/3 of municipalities Same health indicators as above presented separately for poorest 1/3 of municipalities % of project beneficiaries in the lowest quintile of income distribution Beneficiary evaluations % of project beneficiaries in municipalities with extreme poverty Number of smallholders receiving land titles and registration Country Performance Indicators: Poverty gap ratio decreased from 34% in 2000 to 31.7% in The Extreme Poverty Headcount decreased from 43.44% in 1999 to 37.04% in

91 Diagnostic Positive Variables Local participative planning Political consensus for Judicial Reform Consensus to eliminate corruption National Dialogue Variables to Improve The implementation capacity of government Cooperation between levels of government Human resources training Justification of expenses Corruption Independence of the Regulatory System Administration of services at the departmental level Continuity of technical personnel in the government Administration of services at the municipal level Effectiveness of public expenditures Clarification of the system of resource transfers between levels of government Strategies for diffusion Counterpart funds (availability and timeliness of transfer) Special Accounts Normative and policy making capability of the Central Government Strategic Objectives (Prioritized) Deepen decentralizatio n AREA: INSTITUTIONALITY OVERALL OBJECTIVE: Governability to reach the objectives of Opportunity and Equity Strategies Country Performance Indicators World Bank Self-Evaluation Indicators Progress Improve the system of resource distribution and cofinancing for municipalities (fondos) Assure an integrated framework for municipal and departmental strengthening, including participatory medium and long-term planning and coordination of programs at the national level Refine the competencies and responsibilities between the different levels of administrative government Transfer responsibility for formal and alternative education to the municipalities Develop an integral policy for the health sector (compatible with decentralization and popular participation) Strengthen management at departmental and key urban areas Reduce the average time of project approval in each fondo Reduce operating costs of the fondos Increase the number of municipalities with participatory development plans to 150 in 1998, 175 in 1999, and 200 in 2000 On average, increase the proportion of execution of Municipal Annual Operational Plans to 50% in 1998, 60% in 1999 and 70% in 2000 Institutionalize the fiscal administration at the regional, decentralized and municipal levels, including financial management, budget procedures and financial reporting systems in all public entities covering up to 90% of all budgeted funds Ensure correspondence between resource allocation and responsibility for the delivery of services for the different levels of government Comply with the HIPC conditionality to formulate and implement a clear policy the social development funds, including the implementation of a new cofinancing policy Provide 200 rural municipalities with strengthening programs on participatory planning by end-2000 Provide 100 municipalities with financial and administrative strengthening programs by end Implement integrated financial management systems in 10 representative municipalities by end-2000 Design and implement multilateral project accounting system by end-2000 Complete electronic integration of the prefectura IFMS systems and financial reporting with the Ministry of Finance to achieve consolidated national public expenditure reporting by end-2000 Environmental management capacity in place in Oruro, Santa Cruz and Cochabamba Ensure correspondence between resource allocation and responsibility for the delivery of services for the different levels of government World Bank Self-Evaluation Indicators: The National Compensation Policy was approved under the National Dialogue umbrella. 141

92 Diagnostic Strategic Objectives (Prioritized) Consolidate judicial security and institutionality AREA: INSTITUTIONALITY OVERALL OBJECTIVE: Governability to reach the objectives of Opportunity and Equity Strategies Country Performance Indicators World Bank Self-Evaluation Indicators Progress Implement judicial reforms Modernize the legal framework for the private sector Reform the penal system Improve the delivery of judicial services (as reflected in service delivery surveys) by 5% each year Reduce the number and volume of pending cases Reduce the average duration of selected judicial procedures By June 1999, extend training programs to at least 50% of first instance judges and 100% of appeal judges and evaluation of 100% By September 1999, technological modernization of at least 25% of first instance courts and 50% of appeal courts Improve the delivery of judicial services (as reflected in service delivery surveys) by 5% each year Increase the number of cases handled by the Oficina del Defensor del Pueblo By December 1998, approval by Congress of new Civil Procedure Code and issue regulations by December 1999 By December 1999, approval by Congress of new Civil/Commercial Codes and issue regulations by December 2000 Reduce the number and volume of pending cases Reduce the number of persons in jail without sentences Implement recommendations of the independent sector report by end-1999 Establish and staff the Judicial Council by end-1999 Implement action programs to be agreed annually Design by 1998 and implement by 2000 an institutional strengthening program for the Supreme Court and other courts Design by 1998 and implement programs to improve the quality of judicial administration Prepare and approve three laws (Civil Code, Civil Processes Code and Commercial Code) and accompanying regulations by end-1999 Establish a case follow-up system by end-1999 Establish offices of mediation and conciliation by end-2000 [This is not part of the World Bank mandate] World Bank Self-Evaluation Indicators: Three draft proposals regarding modifications to the Civil, the Civil Processes and the Commercial Codes were submitted for Congress approval. 142

93 Diagnostic Strategic Objectives (Prioritized) Reduce corruption AREA: INSTITUTIONALITY OVERALL OBJECTIVE: Governability to reach the objectives of Opportunity and Equity Strategies Country Performance Indicators World Bank Self-Evaluation Indicators Progress Augment responsibility and accountability Annual improvements in Transparency International Index Reduce corruption as perceived by the private and public sector (through the annual integrity survey) Develop and implement a National Integrity Plan Implement auditing capabilities in each regional sub-comptroller office to conduct field audits for all municipalities Implement stand-alone financial management systems and supporting sub-systems in at least 30 representative central government units by 2000 Improvements in the delivery of services Implement integrated financial management systems in 10 representative municipalities by end-2000 Train CGR auditors in anti-corruption audit methods by end-2000 Country Performance Indicators: A National Integrity Plan was designed by the previous government in The Corruption Perception Index (Transparency International) decreased from 2.8 in 1998 to 2.2 in World Bank Self-Evaluation Indicators: The SIGMA was approved in August As of March 2003, it has been implemented in the whole central administration and 17 decentralized entities. The implementation of the SIGMA at the municipal level has just begun in There are agreements with 8 big municipalities and one is already using the system. Under the IDB loan, the objective is to cover 111 municipalities by Increase transparency, in part by involving all society Annual improvements in the Transparency International Index Reduce corruption as perceived by the private and public sector (through the annual integrity survey) Develop institutional capacity to conduct forensic audits through training 70 CGR auditors and 10 CGR lawyers annually in 1999 and 2000 Country Performance Indicators: The Corruption Perception Index (Transparency International) decreased from 2.8 in 1998 to 2.2 in Develop an efficient and transparent State Determine the competencies of the executive structure necessary for the new role of the State Develop a professional and stable civil service including teachers, doctors, etc. Clarify the salary structure of educational personnel Establish incentive schemes based on productivity, efficiency and location (e.g. teachers) Reduce the number of overlapping cases between powers and levels of government Implement the new institutional structure in the central public administration Increase implementation of the number of decisions made by regulators Establish a clear definition of technical and political positions at all levels of government by end-1998 Increase the share of civil servants salaries financed by the Treasury Reduce the annual rate of turnover of technical positions within the central administration Reduce the turnover of technical positions after ach government change (national and municipal) Country Performance Indicators: Incentive schemes for teachers were introduced, not based on productivity nor efficiency but on rural location. World Bank Self-Evaluation Indicators: Between August 2002, when the new government took place, and August 2003, the Civil Superintendence admitted 162 out of 211 reports of technical staff firing, of which 120 were resolved in favor of the technical staff. 143

94 Diagnostic Strategic Objectives (Prioritized) AREA: INSTITUTIONALITY OVERALL OBJECTIVE: Governability to reach the objectives of Opportunity and Equity Strategies Country Performance Indicators World Bank Self-Evaluation Indicators Progress Establish, monitor, and optimize standards for administrative procedures for public services and procurement processes Establish service standards for administrative procedures in public institutions Increase the number of decisions taken via administrative procedures Increase in the number of cases that comply with service standards Increase the number of institutions publishing service quality standards 144

95 145

96 Annex H. El Alto/La Paz Redirection Annex H In parallel with the preparation of this CAS, IDA is supporting the new Government in its transition through an emergency assistance package defined to contribute to the country s urgent short-term financing needs while also assisting with small, focused, and visible social sector investments. This emergency package comprises of the following instruments: i) a $14 million Emergency Economic Recovery Project, discussed at the Board in December 2003, designed to provide quick disbursing financing against a positive list of goods in order to assist the Government of Bolivia; ii) the advance release of the pending second tranche of $10 million of the existing Social Safety Net SAC, conceived as a mechanism to protect priority social expenditures after the February crisis, and sent to the Board for No Objection in December 2003; iii) the acceleration of an existing operation in the portfolio, the Bolivia Institutional Reform project, with $20 million envisaged to be directed towards funding of wages and salaries of civil servant hired through competitive and transparent mechanisms in pilot agencies; and iv) reassigning funds from ongoing IDA operations ($5.6 million before March 2004) to support small but visible social investment projects in the La Paz and El Alto municipalities. For this last activity, country management has identified sources of available funds from projects presently active in the Bolivia portfolio that lie within existing project objectives (no Board approval required), including Road Rehabilitation and Maintenance (P ), Health Reform (PO-60392) and Education Quality and Equity Strengthening (PO-06204). The total amount of redirected funds amounts to $5.7 million, with an additional $14 million to be disbursed from the Road project after March Table 1 below summarizes the details of this emergency package component, which the Bank will finance in line with its fiduciary guidelines. The Government and the donor community have been consulted on this final list and are supportive of it. 146

97 Table 1 - La Paz/El Alto Emergency Assiastance Program Project Activity Amount, in US$ After March INFRASTRUCTURE Road Rehab&Maintenance Resurface/safety upgrading of El Alto La Paz $2,850,000 Road Rehab&Maintenance Environmental Upgrading $250,000 Road Rehab&Maintenance Construction of 2 overpasses $900,000 Road Rehab&Maintenance Upgrading of Connection La Paz-El Alto $2,000,000 Rehabilitation Calamarca-San Pedro $12,000,000 EDUCATION AND HEALTH Health Reform APL I and APL II Complejo Hospitalario Miraflores (La Paz) $399,826 Health Reform APL II Rehabilitation and equipment for 2 health centers (El Alto) $200,000 Education Quality&Equity Strengthening Education Municipal Program (PROME La Paz) $1,290,763 TOTAL $5,763,263 $14,000,

98 148 Annex I