page_title: Bolivia
section_title: Economy
hierarchical_section_title: Bolivia / Economy
caption_attribution_description: Español: Edificios de la paz en Cotahuma
context_page_description: Bolivia, officially the Plurinational State of Bolivia, is a landlocked country located in western-central South America. The constitutional capital is Sucre, while the seat of government and executive capital is La Paz. The largest city and principal industrial center is Santa Cruz de la Sierra, located on the Llanos Orientales, a mostly flat region in the east of the country.
  The sovereign state of Bolivia is a constitutionally unitary state, divided into nine departments. Its geography varies from the peaks of the Andes in the West, to the Eastern Lowlands, situated within the Amazon Basin. It is bordered to the north and east by Brazil, to the southeast by Paraguay, to the south by Argentina, to the southwest by Chile, and to the northwest by Peru. One-third of the country is within the Andean mountain range. With 1,098,581 km² of area, Bolivia is the fifth largest country in South America, after Brazil, Argentina, Peru, and Colombia, the 27th largest in the world, the largest landlocked country in the Southern Hemisphere and the world's seventh largest landlocked country, after Kazakhstan, Mongolia, Chad, Niger, Mali and Ethiopia.
context_section_description: Bolivia's estimated 2012 gross domestic product (GDP) totaled $27.43 billion at official exchange rate and $56.14 billion at purchasing power parity. Despite a series of mostly political setbacks, between 2006 and 2009 the Morales administration has spurred growth higher than at any point in the preceding 30 years. The growth was accompanied by a moderate decrease in inequality. A surplus budget of 1.7% (GDP) was obtained by 2012, the government runs surpluses since Morales administration reflecting a prudent economic management.
  A major blow to the Bolivian economy came with a drastic fall in the price of tin during the early 1980s, which impacted one of Bolivia's main sources of income and one of its major mining industries. Since 1985, the government of Bolivia has implemented a far-reaching program of macroeconomic stabilization and structural reform aimed at maintaining price stability, creating conditions for sustained growth, and alleviating scarcity. A major reform of the customs service has significantly improved transparency in this area. Parallel legislative reforms have locked into place market-liberal policies, especially in the hydrocarbon and telecommunication sectors, that have encouraged private investment. Foreign investors are accorded national treatment.
  In April 2000, Hugo Banzer, the former president of Bolivia, signed a contract with Aguas del Tunari, a private consortium, to operate and improve the water supply in Bolivia's third-largest city, Cochabamba. Shortly thereafter, the company tripled the water rates in that city, an action which resulted in protests and rioting among those who could no longer afford clean water. Amidst Bolivia's nationwide economic collapse and growing national unrest over the state of the economy, the Bolivian government was forced to withdraw the water contract.
  Bolivia has the second largest natural gas reserves in South America. The government has a long-term sales agreement to sell natural gas to Brazil through 2019. The government held a binding referendum in 2005 on the Hydrocarbon Law.
  The US Geological Service estimates that Bolivia has 5.4 million cubic tonnes of lithium, which represent 50%–70% of world reserves. However, to mine for it would involve disturbing the country's salt flats (called Salar de Uyuni), an important natural feature which boosts tourism in the region. The government does not want to destroy this unique natural landscape to meet the rising world demand for lithium. On the other hand, sustainable extraction of lithium is attempted by the government. This project is carried out by the public company "Recursos Evaporíticos" subsidiary of COMIBOL.
  It is thought that due to the importance of lithium for batteries for electric vehicles and stabilization of electric grids with large proportions of intermittent renewables in the electricity mix, Bolivia could be strengthened geopolitically. However, this perspective has also been criticized for underestimating the power of economic incentives for expanded production in other parts of the world.
  Once Bolivia's government depended heavily on foreign assistance to finance development projects and to pay the public staff. At the end of 2002, the government owed $4.5 billion to its foreign creditors, with $1.6 billion of this amount owed to other governments and most of the balance owed to multilateral development banks. Most payments to other governments have been rescheduled on several occasions since 1987 through the Paris Club mechanism. External creditors have been willing to do this because the Bolivian government has generally achieved the monetary and fiscal targets set by IMF programs since 1987, though economic crises have undercut Bolivia's normally good record. However, by 2013 the foreign assistance is just a fraction of the government budget thanks to tax collection mainly from the profitable exports to Brazil and Argentina of natural gas.
caption: La Paz, Bolivia
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