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The Monetary and Fiscal History of Bolivia, 1960-2017

Staff Report 579 | Published February 13, 2019

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Timothy J. Kehoe Consultant, University of Minnesota, and National Bureau of Economic Research
Carlos Gustavo Machicado Institute for Advanced Development Studies (INESAD)
José Peres-Cajías University of Barcelona
The Monetary and Fiscal History of Bolivia, 1960-2017


After the economic reforms that followed the National Revolution of the 1950s, Bolivia seemed positioned for sustained growth. Indeed, it achieved unprecedented growth from 1960 to 1977. Mistakes in economic policies, especially the rapid accumulation of debt due to persistent deficits and a fixed exchange rate policy during the 1970s, led to a debt crisis that began in 1977. From 1977 to 1986, Bolivia lost almost all the gains in GDP per capita that it had achieved since 1960. In 1986, Bolivia started to grow again, interrupted only by the financial crisis of 1998–2002, which was the result of a drop in the availability of external financing. Bolivia has grown since 2002, but government policies since 2006 are reminiscent of the policies of the 1970s that led to the debt crisis, in particular, the accumulation of external debt and the drop in international reserves due to a de facto fixed exchange rate since 2012.