Bolivia : Public Expenditure Management for Fiscal Sustainability and Equitable and Efficient Public Serivces
This Public Expenditure Review (PER) - an update of the 1999 PER - is intended to provide recommendations that will allow Bolivia to regain control of its public finances, and further improve the equity, and efficiency of public services. The first...
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| Format: | Public Expenditure Review |
| Language: | English en_US |
| Published: |
Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/11/5600786/bolivia-public-expenditure-management-fiscal-sustainability-equitable-efficient-public-serivces http://hdl.handle.net/10986/14385 |
| Summary: | This Public Expenditure Review (PER) -
an update of the 1999 PER - is intended to provide
recommendations that will allow Bolivia to regain control of
its public finances, and further improve the equity, and
efficiency of public services. The first part of the report
looks at the macroeconomic setting and fiscal balance,
significantly deteriorated in recent years, with an annual
GDP growth of only 2.4 percent during 1997-2003. Weaker
economic activity, the winding down of privatizations of
public enterprises, and poor fiscal policy decisions
(particularly on hydrocarbons) led to stagnant government
revenue. Part II looks at the structure and trends of public
expenditures, pointing that Bolivia's high indebtedness
is an indication that the public sector is too large,
considering the country's low level of revenue
collection. The report explores the principal components of
increased government spending, where by and large, wages,
pensions, and interest payments amount to 70 percent of
total revenues, and have increased by around 20 percent of
GDP since 1998. Capital spending (public investment) has
also increased recently, and current spending is required to
maintain these capital investments, i.e., they will have a
future impact on the budget. Recommendations suggest
addressing the current fiscal imbalance by implementing
expenditure caps on total fiscal expenditure; proposing
reforms to increase efficiency of pension cost
administration; adjusting local prices of fuel in accordance
to changes in international prices; and, deepening the civil
service reform. In the long run, subsidies to diesel fuel
for electricity generation should be eliminated, and,
regressive health insurance fund subsidies should be reviewed. |
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