2. The Bolivian Case
Bolivia has an average income per head of around US$ 1000
and glaring regional and ethnic (white and mestizo versus Indian) inequal-
ity. Social indicators are much closer to those of African countries than to
the rest of Latin America. Two thirds of the population is living below the
national poverty line, and child mortality in the poorest regions is among the
highest in the world. In 1985, a few years after the restoration of democracy,
the country embarked on a sweeping economic reform program with the
help of the IMF and the World Bank (Morales & Sachs 1990). Since then,
the country has been a model pupil of the Bretton Woods Institutions, and
has received vast amounts of development aid from multilateral and bilateral
sources4. It has sound macroeconomic policies and has enacted bold liberal
reforms, involving among others the privatization of mining and bank-
ing industries. It has however not witnessed the high rates of growth of for
instance its neighbor Chile or the Asian economies whose macroeconomic
policies it has successfully emulated (Kaufmann et al; 2001). In the 1990s, a
moderate annual growth of GNP of 4% was registered, but much of that was
offset by a rapidly expanding population and since the end of the 1990s, the
country is in economic crisis (Banco Central 2002). In fact, over the whole
period 1985-2001 Bolivia has achieved an insignificant per capita income
growth rate of less than 1% a year (World Bank 2002b), vastly insufficient
to lift Bolivians out of poverty within an acceptable time horizon. To make
matters worse a disproportionate part of growth was concentrated in the
richer areas of the country (the axis La Paz -Cochabamba - Santa Cruz) and
in capital-intensive hydrocarbon and mineral industries. Bolivia is, together
with Guyana, the only country in South America on the World Bank list of
highly indebted poor countries (HIPC). This means that its external debt,
mainly owed to multilateral and bilateral public creditors, is judged unsus-
tainably high (World Bank Staff 2002).
4 Foreign aid stood at a massive
two thirds of central govern-
ment expenditures during the
second half of the 1980s, one
half during the first half of the
1990s, and one-third during the
second half of the 1990s (World
Bank 2002b). International aid
flows have sharply dropped in
importance since the beginning
of macroeconomic reform, but
donor influence has not waned
in the same proportion. In fact
donors have in recent years
increased their pressure on the
Government through high level
consultations in the context of
the Comprehensive Development
Framework (Carafa 2000)
Access to the HIPC resources after the expansion of the initiative in
1999 (henceforward called HIPC II) is linked to the country organizing a
civil society participation process. To be sure, participation is not as strict a
condition as for instance sound macroeconomic policies. There is a strong
suggestion that some participation be organized. World Bank and IMF staffs
do not however have precise criteria by which to judge success in this area
and they mainly want to be satisfied that the country has done a genuine ef-
fort to involve civil society. In Bolivia, the government organized a National
Dialogue - sometimes referred to as Dialogue 2000 or Dialogue 2- with
respect to the PRSP. This Dialogue was a country-led, nationwide consulta-
tion process that was initiated in June 2000 and ended three months later in
August 2000. In total 2,423 people participated in the Dialogue (273 at the
national level, 935 at the departmental level and 1,215 at the municipal level)
(Christian Aid 2001:5). The consultation process was conducted through
municipal, departmental and national government structures, making use
of the institutional framework the Law of Popular Participation (Ley de la
Participacion Popular) provides since 1994. Greatest emphasis was placed
IDPM-UA Discussion Paper 2002-05 • 7