Bolivia Economy

Bolivia Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax System

Basic data

As a result of the coronavirus pandemic, the Bolivian economy fell into a deep recession, the largest recorded since 1953. In 2020, industry, tourism, mining and transport were the most affected. In 2021, the economy grew by 6.11%, placing it among the three fastest-growing countries in the region, but it was still not enough to offset the decline from the previous year. According to government data, the growth was mainly due to mining, construction, services and trade. According to official estimates, the economy should continue to grow by more than 5% in 2022, and inflation is expected to be around 3.3%. Check ebizdir for economical facts of Bolivia.

In the first half of 2020, the lowest inflow of foreign investments in the last 7 years was recorded (189.9 million USD). The reason was low gas prices, the closure of Bolivia to international trade, unclear conditions for investors and a non-transparent tax system. However, in the first half of 2021, foreign direct investment increased by 459% compared to the same period of the previous year. This was mainly due to the oil and natural gas industry (USD 188 million), the mining industry (USD 158 million) and the processing industry (USD 99 million). Natural gas accounts for 50% of Bolivia’s exports and a major source of tax revenue. The main industries are mining, food processing and petrochemicals. The Bolivian economy is based primarily on the extraction and export of raw materials.

Extreme poverty is expected to grow in Bolivia. According to official data, 13.7% of the population now fall into this category, the overall poverty rate has risen slightly to 39%. In 2019, 12.9% of Bolivia’s population was extremely poor. In this context, in December 2021, the Senate approved the Economic and Social Development Plan 2021-2025 (Plan de Desarrollo Económico y Social), which aims to industrialize the country and reduce dependence on imports. For this purpose, a total of USD 3billion will be allocated for investments in productive sectors of the economy and support of domestic demand, further reducing the poverty rate from 39% to 19% (extreme poverty to 5.3%) and equalizing income inequality expressed by the Gini coefficient of 0.45 to 0.42. Regarding the country’s international comparison, Bolivia ranks 107th in the Human Development Index, 130th.

Table from MOP + additionally balance of payments, indebtedness/GDP.

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 2.2 -7.8 5 4.5 2.3
GDP/population (USD/PPP) 8,626.80 7,851.70 8,400.00 9,020.00 9,330.0
Inflation (%) 1.8 0.9 0.7 2.3 4
Unemployment (%) 3.9 9 8 8 7
Export of goods (billion USD) 8.8 6.9 10.7 12 11.3
Import of goods (billion USD) 9.8 7.1 9.5 10.5 10.7
Trade Balance (Billion USD) -0.2 0.4 2 2.4 1.5
Industrial production (% change) ON ON ON ON ON
Population (millions) 11.5 11.7 11.8 12 12.2
Competitiveness ON ON ON ON ON
OECD export risk 05.VII 05.VII 05.VII ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -7.6
Public debt (% of GDP) 79.8
Current account balance (billion USD) 1.1
Taxes 2022

In general, it can be said that almost all macroeconomic indicators have improved in 2021 compared to the previous year, but the dynamism of the economy still does not reach pre-pandemic values. The fiscal deficit decreased from 12% to 4.9% (however, it is predicted to grow to 8% in 2022) and the value of exports grew to 10 billion USD. However, production is not expected to return to pre-pandemic levels until 2024, making Bolivia’s recovery the slowest in Latin America. These are average values ​​from the period 2006-2019, with the exception of inflation, which is lower. This is mainly due to the fixed exchange rate of the Bolivian, which, however, puts considerable pressure on the central bank’s foreign exchange reserves (USD billion).

Economic recovery is associated with a partial revival of incomes, in addition to the reduction of the domestic budget deficit, a positive trade balance of USD 1.36 billion was also recorded. However, the recovery of the economy is also accompanied by an ever-increasing public debt, which exceeded 50% of GDP at the end of 2020, while according to estimates by the International Monetary Fund, it could exceed 80% of GDP at the end of 2022. Since 2007, this value has increased times. The main reason, in addition to the increase in government investment, is, among other things, the unbearable expenses for the salaries of civil servants, of whom there are more than half a million. Bolivia ranks 171st out of 181 countries in terms of fiscal health and 186th out of 189 countries in terms of ease of paying taxes. A gradual fiscal consolidation is expected to take place to 2% of GDP by 2025, as a result of a reduction in current expenditure (mostly a reduction in wage expenditure) and capital expenditure (a reduction in public investment projects). The level of indebtedness is accompanied by the country’s limited access to international financing.

Public consumption will support growth very modestly. Bolivian commodity exports will suffer from weak external demand due, among other things, to a limited number of trading partners; despite the recovery in world oil and natural gas prices in the year, natural gas production in Bolivia will remain low, as natural gas prices are adjusted with a six-month lag. There is still a lack of oil processing plants in the country, so it is exported in a crude state. Annual GDP growth is projected to average 1.8% from 2022-2025; which is lower than before the pandemic, mainly due to the decline in natural gas production and the expected tightening of the public budget.

Banking system

The Bolivian banking system consists of the Central Bank – Banco Central de Bolivia and 11 private banks. The largest bank in the country is Banco Santa Cruz, which is part of the Spanish group Santander, followed by Banco Nacional de Bolivia, Banco de Crédito, Banco Industrial, Banco Unión and others. The basis of the banking system is Banking Law No. 1488 of 1993. In 1995, banking supervision was redefined, which was transferred to the control of a single institution – the Financial Supervision Authority (Autoridad de Supervisión del Sistema Financiero – ASFI,

In 2007, a new state-owned financial institution, Banco de Desarrollo Productivo (BDP), was created to ensure access to credit for small businesses and entrepreneurs. According to the new constitution of 2009, the monetary policy of the state falls under the competence of the Ministry of Economy and Finance in cooperation with the central bank. In general, the banking sector, along with telecommunications and the mining industry, is still attractive for foreign investment.

Tax system

Bolivia’s tax system is based on a relatively small number of taxes, most of which burden consumption. However, there are many exceptions to the system, which makes it very non-transparent. The main regulatory framework is Act No. 843 from 1986, which defines the conditions for the application of individual types of taxes.

Among the most important are, in addition to income tax (13%), another 5 tax items (which represent 95% of tax revenues):

  • VAT (Impuesto al Valor Agregado, IVA): 13%
  • Special tax on petroleum products (Impuesto Especial a los Hidrocarburos, IEHD): 32%
  • Business profit tax (IUE) 25%
  • Sales tax (Impuesto a las Transacciones, IT): 3% • Specific consumption tax (Impuesto de Consumo Específico, ICE): selectively


  • Tobacco products: 50%
  • Cars: 18%
  • Alcohol: 0.22 to 7.32 BOB per 1 liter for beer, wine, etc.

Bolivia Economy