Document of The World Bank FOR OFFICIAL USE ONLY Report No. 125068-BO INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION AND MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP FRAMEWORK FOR THE PLURINATIONAL STATE OF BOLIVIA FOR THE PERIOD FY2016-2020 May 31, 2018 Bolivia, Chile, Ecuador, Peru and Venezuela Country Management Unit Latin America and Caribbean Region The International Finance Corporation Latin America and the Caribbean Region The Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. The date of the last Country Partnership Framework was November 4, 2015 (Report No. 82173-BO) FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS USD 1 = Bs. 6.97 ABBREVIATIONS AND ACRONYMS ABC Bolivian Roads Agency (Administradora Boliviana de Carreteras) AF Additional Financing ASA Advisory Services and Analytics CPF Country Partnership Framework CPPR Country Portfolio Performance Review DPF Development Policy Financing DRM Disaster Risk Management FDI Foreign Direct Investment FY Fiscal Year GDP Gross Domestic Product GruS Bolivia Donors Group (Grupo de Socios para el Desarrollo de Bolivia) IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation INE National Statistics Institute (Instituto Nacional de Estadísticas) IPF Investment Project Financing MDP Ministry of Development Planning MIGA Multilateral Investment Guarantee Agency MSME Micro, Small and Medium Enterprise PDES Economic and Social Development Plan (Plan de Desarrollo Económico y Social) PLR Performance and Learning Review PPP Public Private Partnership SCD Systematic Country Diagnostic SDR Special Drawing Rights SME Small and Medium Enterprise SOEs State Owned Enterprises TA Technical Assistance WBG World Bank Group YPFB Bolivian State-Owned Oil and Gas Company (Yacimentos Petrolíferos Fiscales Bolivianos) World Bank IFC MIGA Vice President: Jorge Familiar Georgina Baker Keiko Honda Director: Alberto Rodriguez Gabriel Goldsmith Merli Margaret Baroudi Country Manager: Nicola Pontara Carlos Pinto Task Team Leader: Nicola Pontara, Maria Eduardo Wallentin, Gianfilippo Carboni, Alejandra Velasco Antonio Skarica Gero Verheyen i Table of Contents I. INTRODUCTION ................................................................................................................................... 1 II. MAIN CHANGES IN COUNTRY CONTEXT .................................................................................. 2 Recent Economic Developments ..................................................................................................... 2 Progress on Poverty and Shared Prosperity ..................................................................................... 3 Political Context .............................................................................................................................. 4 III. SUMMARY OF PROGRAM IMPLEMENTATION ....................................................................... 4 Portfolio Overview........................................................................................................................... 4 Summary of Progress Towards Achieving CPF Objectives ............................................................ 6 Evolution of Partnerships and Leveraging ....................................................................................... 8 IV. EMERGING LESSONS ...................................................................................................................... 9 V. ADJUSTMENTS TO the COUNTRY PARTNERSHIP FRAMEWORK ..................................... 10 VI. RISKS TO CPF PROGRAM............................................................................................................. 13 Annex 1. Updated CPF Result Framework ............................................................................................ 14 Annex 2: Matrix of Changes to Original CPF Results Framework ..................................................... 17 Annex 3: Summary of Progress Towards CPF Objectives ................................................................... 21 Annex 4: Monitoring of the Updated CPF Results Framework ........................................................... 27 Annex 5: Key Economic Indicators ......................................................................................................... 31 List of Figures Figure 1: Poverty and Inequality................................................................................................................... 4 Figure 2: Growth Incidence Curves .............................................................................................................. 4 List of Tables Table 1: ASA and TA Program in FY16-17 ................................................................................................. 6 Table 2: Tentative ASA Program for FY18-19 .......................................................................................... 12 Table 3: Risk Ratings .................................................................................................................................. 13 ii I. INTRODUCTION 1. This Performance and Learning Review (PLR) summarizes progress in the implementation of and updates to the World Bank Group (WBG) Country Partnership Framework (CPF) for the Plurinational State of Bolivia for the Period FY2016-2020 (Report No. 82173-BO). The CPF, discussed by the Board of Executive Directors on December 8, 2015, proposed a program of assistance, designed around two pillars, to: (i) promote broad-based and inclusive growth, and (ii) support environmental and fiscal sustainability, and resilience to climate change and economic shocks. Five inter-linked objectives have guided the WBG’s engagement for the CPF period to date.1 The formulation of the CPF reflected the existing WBG program, the Government’s development strategy, the findings of the Systematic Country Diagnostic (SCD) and WBG comparative advantage. The adjustments to the current CPF reflect implementation challenges, a changing country context and emerging Government priorities. 2. The CPF remains well-aligned to the Government’s vision, despite some priority shifts. The Government’s strategy is outlined in the Agenda Patriótica 2025, and the five-year Plan de Desarrollo Económico y Social 2016-2020 (PDES, Economic and Social Development Plan). When it was developed, the core Government strategy was primarily based on a state-led development model, which also aimed at attracting private investment in selected sectors. Since its enactment, the Government has prioritized new areas (industrialization, education, health, youth employment and justice). The Government also shifted, to some extent, its focus from rural to urban areas. In response, the WBG modified its lending program, stepping up engagement in new areas that had been prioritized by the SCD and where the WBG has both a strong comparative advantage and a track-record of operations in Bolivia (e.g., health). 3. The CPF is being implemented amidst a changing macroeconomic and social context. Expansionary policies have been used to cushion the fall in commodity prices. While these policies have contributed to maintain robust economic growth rates, they have generated sizable fiscal deficits. On the social front, after a decade of remarkable gains, progress on the reduction of poverty and inequality has been slower since 2014. The CPF period extends through June 2020 (including five months of the new Administration) and, therefore, provides an instrument to maintain the dialogue while a new national development plan is enacted. 4. The CPF, with some changes, continues to provide an adequate umbrella for the collaboration between Bolivia and the WBG. This PLR introduces some adjustments in objectives and indicators. The main change, however, is the dropping of Objective 5, ‘Strengthen Institutional Capacity to Improve Public Resource Management and the Business Environment’, given reduced interest in tackling this issue and the introduction of a new Objective ‘Improve the Information Base to Provide Quality Data for Public Policy Planning and Evaluation’. The other four objectives remain valid, but some indicators have been adjusted to reflect delays in implementation, changes in methodologies, and emerging Government priorities for the outer years of the CPF. 1 Pillar 1: (i) Reduce Transport Costs and Increase Connectivity of Isolated and Vulnerable Communities to the National Road Network in Selected Areas; (ii) Increase Access to Selected Quality Basic Services for the Poorest Rural and Urban Communities; (iii) Improve Opportunities for Income Generation, Market Access and Sustainable Intensification. Pillar 2: (iv) Strengthen Capacity to Manage Climate Change and Reduce Vulnerability to Natural Disasters; and (v) Strengthen Capacity to Improve Public Resource Management and the Business Environment. 1 II. MAIN CHANGES IN COUNTRY CONTEXT Recent Economic Developments 5. The PDES 2016-2020 set out Bolivia’s state-led development strategy and envisaged an expansionary policy stance. The Plan underscored the role of public investment as the main engine of growth and projected significant investments on hydrocarbon exploration, electricity generation, transport infrastructure, and public services. The original plan was to fund this investment push by a mix of public borrowing, a partial consumption of the buffers accumulated, and Foreign Direct Investment (FDI). Since its enactment, the Government has prioritized new areas (industrialization, education, health, youth employment and justice). The Government also shifted, to some extent, its focus from rural to urban areas. 6. Expansionary policies cushioned a less favorable external environment but created macroeconomic imbalances. Growth decelerated from 4.9 to 4.2 percent of the Gross Domestic Product (GDP) between 2015-2017 due to a fall in commodity prices, lower gas production, volatility in the gas demand from Brazil, and stagnation of mining. Accommodative macroeconomic policies cushioned the growth slowdown: while low energy prices and falls in royalties curbed investment at subnational levels, capital spending by the central government and State-Owned Enterprises (SOEs) remained high, fueled by Central Bank financing. Domestic credit was boosted by credit allocations to productive sectors and social housing and interest rates ceilings (as per the 2013 Financial Services Law), expansionary open market operations, and lower reserves requirements. As a result, sizable current account and fiscal deficits emerged, at 6.3 and 7.8 percent of GDP in 2017, respectively (see Annex 5). 7. A mix of external and internal borrowing and the depletion of the fiscal and external buffers financed the twin deficits. Between 2015 and 2017, public debt increased from 42 to 50 percent of GDP, including through an international bond issuance (US$1 billion), budget support loans from multilaterals sources other than the WBG, and Central Bank financing to SOEs2. Over the same period, deposits of the public sector at the Central Bank declined from 21 to 17 percent of GDP, while international reserves fell significantly from 39 to 27 percent of GDP. A bigger fall in reserves was prevented through the imposition of import restrictions. Additionally, the reduction of reserve requirements on dollar-denominated deposits of commercial banks at the Central Bank, the requirement that pension funds invest mainly in domestic assets, and the shift of the deposit insurance portfolio (the Savers Protection Fund) from foreign to local currency, all prevented a further erosion of the country’s foreign assets position over this period. 8. Some efforts have been undertaken to spur private investment. In line with the PDES, the Government continued to rely heavily on public investment in key sectors such as extractive industries, electricity, lithium, and transport infrastructure. However, the dialogue between the public and private sectors has intensified, including the setting up of working groups to improve the business climate. In the hydrocarbon sector, the Government has introduced fiscal incentives for exploration and production, including in protected areas, and allowed the SOE Yacimientos Petroliferos Fiscales Bolivianos (YPFB, the State-Owned Oil and Gas Company) to extend contracts with foreign investors in exchange for investments in areas of ongoing operations. In 2 Public sector debt held by the pension funds has remained relatively stable – thus most of the country’s US$15billion in pension assets largely invested in short-term papers issued by commercial banks. 2 non-hydrocarbon sectors, new regulations allow subnational governments to embark on ventures with the private sector, while restrictions to export alcohol, soy and sorghum, have been relaxed. Attracting more private investment will depend on a more conducive legal and regulatory framework. 9. However, private investment has remained modest. Despite the above, the sustained expansion of domestic credit and a buoyant real estate market, private investment has remained around 8 percent of GDP since 2015, in line with its historical levels. Although the Government enacted reforms to prop-up agricultural exports, and has entered selective alliances with the private sector (including a ground-breaking initiative to promote youth employment), these ad hoc changes have not tackled some of the binding constraints to private investment such as cumbersome tax procedures and rigid labor regulations. Additionally, several economic factors (e.g., generous salary increases and high logistic costs) also undermined the country’s competitiveness. 10. Bolivia’s gas production levels, the country’s key foreign exchange earner, are uncertain. Insufficient investment in exploration, and struggles to meet peak demand from neighboring countries, have generated concerns about the sustainability of the gas sector. Fiscal incentives to encourage investments and the extension of existing contracts have sent strong signals of the Government’s willingness to address the situation, but FDI is yet to materialize. Also, the government-to-government agreements on gas exports with other countries in the region might soon be replaced by competitive (market-based) transactions. 11. Growth may be sustained over the remaining of the CPF period, but with downside risks. Growth is forecast to revert gradually to around 3.5 percent of GDP by the end of the decade, as public investment and domestic credit stabilize. There exist several downside risks that need to be taken into account, including: (i) possible low economic and financial returns on ongoing public investments; (ii) potential constraints on expansionary policies, such as the possibility of a faster than envisaged erosion of macroeconomic buffers; (iii) lower than expected private investments; and (iv) adverse developments in the domestic gas sector whether coming from lower than expected gas reserves, faster than expected depletion of fields, or weaker than expected demand. Progress on Poverty and Shared Prosperity 12. After a decade of remarkable social gains, progress on the reduction of poverty and inequality have slowed down and growth is no longer pro-poor. Between 2004 and 2014, the national poverty rate declined from 63 to 39 percent, extreme poverty fell from 39 to 17 percent, and the Gini coefficient dropped from 0.60 to 0.47 (Figure 1, see also Annex 5). But the reduction of poverty and inequality has slowed down. Poverty hovered around 39 percent between 2013 and 2016, as the reduction of rural poverty (from 60 to 57 percent) was offset by an uptick of urban poverty (from 29 to 31.6 percent). Recent data suggest that moderate poverty, notably urban poverty, declined in 2017, which is an encouraging sign. However, changes in income for people near the poverty line could be reversed. Moreover, the Growth Incidence Curve remained almost flat between 2011 and 2016, indicating that income gains have been more evenly distributed across the income distribution (Figure 2).3 3 The slowdown in earnings has been more pronounced in low-skilled labor-intensive sectors such as agriculture and construction. In agriculture, annual growth in median wages was negative over the 2011-2016 period. Wage growth 3 Figure 1: Poverty and Inequality Figure 2: Growth Incidence Curves 70 0.7 25 20 60 0.6 Annual growth rate, percent 15 Percent of population Gini coefficient 50 0.5 10 5 40 0.4 0 30 0.3 -5 -10 20 0.2 5 15 25 35 45 55 65 75 85 95 2005 2006 2007 2008 2009 2011 2012 2013 2015 2016 2010 2014 Percentiles 2006-2011 2011-2016 Gini coefficient (RHS) Pover ty (LHS ) Source: National Statistics Institute (INE, 2018) Source: Staff estimates (2018) 13. As such, looking forward, it will be important to maintain and advance Bolivia’s social gains. A large share of the Bolivian population is clustered around the poverty line, making it vulnerable to economic and other types of exogenous shocks, e.g., those linked to drought and floods, which are increasingly frequent in Bolivia. Resuming the previous pace of poverty and inequality reduction in a less favorable international context will require a new mix of policies to: (i) propel economic growth without undermining long-term sustainability; (ii) target social protection programs (most of them currently universal in nature); (iii) renew the focus on boosting human capital, starting in early childhood; and (iv) improve the access to and quality of basic services, with a special focus on education, health and water and sanitation. Political Context 14. Presidential elections are slated for late 2019. In November 2017, the Constitution Court lifted the two-consecutive term limit for the reelection of authorities in Bolivia. The CPF period extends through June 2020 (including five months of the new Administration) and, therefore, provides an instrument to maintain the dialogue while a new national development plan is enacted. III. SUMMARY OF PROGRAM IMPLEMENTATION Portfolio Overview 15. The World Bank portfolio consists of eight Investment Project Financing (IPF) operations and a trust-funded project, with US$1 billion in total commitments, of which US$761 million (76 percent) remains undisbursed. Total commitments increased by almost 50 percent since the beginning of the CPF period, from US$672 million in FY16. Four IPFs, totaling US$304 million, exited the portfolio in FY16-17, while two IPFs and two Additional Financings (AF) totaling US$615 million were approved. The average value of World Bank financing for projects has increased from US$61 million in FY16 to US$111 million at present. The World Bank’s financing of projects in Bolivia has been channeled mostly through IPFs. A Development Policy Financing (DPF) to support Disaster Risk Management (DRM) closed in FY16. The has also declined in more labor intensive urban sectors such as construction and retail, usually the drivers of income growth for the bottom 40 percent. Only manufacturing and services experienced a higher wage growth in recent years. 4 deterioration of the medium-term macroeconomic framework has prevented the preparation of new DPF. 16. Bolivia has a risky portfolio that requires close implementation support. Efforts to support institutional strengthening in key sectors, particularly in the transport sector, where 56 percent of commitments and two thirds of the undisbursed balance are concentrated, have not yet produced the desired results. Implementation capacity, already weak, has been further undermined by limited coordination within the Government.4 The World Bank has provided close implementation support: for instance, projects in the transport sector have had three to four implementation support missions per year. The World Bank’s fiduciary team provided systematic training to project counterparts and local focal points ensured day-to-day guidance and supervision. Monthly implementation meetings include representatives from the Ministerio de Planificación del Desarrollo (Ministry of Development Planning, MDP), and bi-annual Country Portfolio Performance Reviews (CPPR) have taken place. 17. Efforts have focused on ensuring realism and proactivity of the active portfolio. Problem projects increased from 27 to 44 percent since the beginning of the CPF, although commitments at risk decreased from 27 to 23 percent. Proactive actions were taken: two of the four problem projects were restructured, a third is being partially cancelled, and the future of a fourth in transport will be determined once the accomplishment of agreed steps (or lack thereof) is assessed. Long delays in project effectiveness and restructuring, coupled with limited institutional capacity in some sectors, particularly at the Administradora Boliviana de Carreteras (ABC, Bolivian Roads Agency), have resulted in difficulties to implement the portfolio. Overall, the portfolio disbursement ratio is low at 2.4 percent as of April 2018. Improvements in portfolio performance indicators are envisaged as implementation of the restructured projects is expected to improve and large contracts under the transport projects are awarded. 18. Lending volumes were adjusted to the circumstances and are being aligned with emerging priorities. The CPF envisaged an indicative lending volume of up to US$2 billion over the five years of the CPF period, an average of US$400 million per year.5 During the first two years of the CPF, new commitments averaged US$307 million per year. An IPF in health in the amount of US$300 million is expected to be approved in late FY18. However, the overall delivery of new lending in FY18 has been delayed due to the Government’s decision to slow down the contracting of new debt given high undisbursed balances, particularly in the water sector. Moving forward, a lending volume of around US$250-300 million per year seems more realistic, especially considering the Government’s absorptive capacity. Further, the Government’s interest in World Bank financing may decline, as new sources of funding become available through the issuance of sovereign bonds and lending from new sources of financing, such as China. 4 In general, when projects involve sub-national governments or inter-institutional agreements, the process to reach effectiveness is lengthy (it took around 16 months on average). Implementation is also slow in these cases due to complex bureaucratic processes. 5 Bolivia graduated from IDA in FY17 and became an IBRD-only country in FY18. In addition to the regular IDA17 allocation, Bolivia benefited from the IDA Scale-Up Facility in FY17 (US$30 million). The CPF envisioned the transition of Bolivia to an IBRD-only status by the end of the IDA17 cycle. IDA is providing transitional financing under IBRD terms to Bolivia during FY18-20 for an amount equivalent to Special Drawing Rights (SDR) 99 million, two thirds of the IDA17 allocation to the country. The current IDA portfolio is US$491 million out of the US$1billion in total commitments. 5 19. Although limited, Advisory Services and Analytics (ASA) have been critical to underpin project preparation and policy dialogue. Some knowledge gaps identified in the SCD6 have been addressed, in particular the need for better understanding of the impact of disasters and climate change on the welfare of the poor. A study on environmental planning in the hydrocarbon sector has also been delivered. Other ASA in the domain of education and the micro-determinants of growth have not been carried out for lack of demand by the Government. However, new opportunities have been harnessed: ASA have underpinned the preparation of new projects in the water and sanitation sector and on urban resilience. Technical Assistance (TA) has also supported policy dialogue in areas where there is nascent interest from the authorities in the WBG knowledge and expertise, e.g., Public-Private Partnerships (PPPs) (Table 1). Table 1: ASA and TA Program in FY16-17 FY16 FY17 Strengthening Human Talent for Science, Technology Intermediate Cities Technical Assistance and Innovation Oil and Gas Sector: International Practices for Qualitative and quantitative studies on the impacts of Environmental Management floods and droughts on the poor in Bolivia Multiannual Budgeting and Planning Strengthening Delivery of Sustainable Water Services for the Most Disadvantaged in Bolivia (Programmatic FY17-19) Urban Development TA Dialogue on PPP – International Experience 20. Since the beginning of the CPF, the International Finance Corporation (IFC) has committed eight new projects for a total of US$54 million. Two of these projects tackle long term finance, focusing on commercial banking and Micro and Small and Medium Enterprises (MSMEs).7 IFC has developed six finance lines to support trading activities. IFC currently has an outstanding portfolio of US$27.4 million in Bolivia, consisting of seven active projects. This volume of business represents a slight decrease with respect to the beginning of the CPF period (US$32 million). However, it remains over 50 percent higher than the historical low in the collaboration with IFC, experienced in 2013 and 2014. Most of the IFC portfolio is focused on MSME financing, in addition to three smaller projects in manufacturing and infrastructure. Summary of Progress Towards Achieving CPF Objectives 21. Progress towards the achievement of CPF objectives has been mixed. Of the 13 CPF objective indicators, four have been partially achieved and are on track to be achieved in the remainder of the CPF period; progress on two objective indicators cannot be reported against their baseline values due to methodological changes (indicators will be maintained but baseline and target values will be adjusted), and seven indicators have witnessed limited or no progress due to difficulties in project implementation (three of them are linked to problem projects) or lack of achievement of envisaged activities. Details on the progress by objective and indicator, under each of the CPF’s two pillars, are described below. 6 The SCD identified the following knowledge gaps: (i) spatial analysis of poverty dynamics; (ii) the impact of climate change and natural disasters on poverty; (iii) learning achievements and quality of education; (iv) firm-level data and analysis on innovation; (v) potential for productivity and employment growth through services; (vi) product market competition; (vii) the impact of recurrent state market interventions, and (viii) public expenditure. 7 IFC investments have reached 16,000 MSMEs through loans with local banks, for a total volume of more than US$740 million. 6 Pillar 1: Promote Broad-Based and Inclusive Growth 22. Objective 1: Reduce transport costs and increase connectivity of isolated and vulnerable communities to the national road network in selected areas. Due to implementation challenges in the portfolio in transport, the objective, as it is framed, is not achievable by the end of the CPF. An IPF to support the year-round transitability of the San Buenaventura-Ixiamas road began implementation in FY16 (P122007) but was stopped temporarily due to the departure of the construction firm. Two IPFs to improve transport accessibility and the condition of the primary road network were approved, and implementation is in the initial stages. As such, the reduction in transport costs to San Buenaventura-Ixiamas (Indicator 1) has not registered progress to date. Traditionally strong, the operations in rural development have supported investments in basic rural infrastructure to increase the connectivity of rural and isolated communities and producers. The number of people with improved access to markets and services (Indicator 2) is on track, even though progress was less than expected due to delays in the effectiveness of the AF in the sector. 23. Objective 2: Increase access to selected quality basic services for the poorest rural and urban communities. Progress towards this objective has been mixed. There has been little progress in increasing households’ access to electricity (Indicator 3) due to the implementation challenges affecting the Access and Renewable Energy Project (P127837), which is being cancelled.8 Basic social and productive services have continued to be provided to the poorest rural communities through the Community Investment in Rural Areas Project (P107137). Yet, the percentage of the population in the bottom quartile of municipalities benefiting from expanded access to basic services (Indicator 4) could not be measured against its baseline value due to changes in the methodology used to classify municipalities by poverty level.9 A strong TA program has been supporting the elaboration of a National Urban Development Plan (Indicator 5), which is partially achieved. 24. Objective 3: Improve opportunities for income generation, market access and sustainable intensification. Progress towards this objective has been limited. The successful World Bank-financed Rural Alliances Project (P127743) has contributed to a 38 percent increase in the average volume of sales of products involved in rural alliances (Indicator 6), if measured using the new methodology developed to measure aggregate sales. IFC program has supported access to financial services to MSMEs (Indicator 7), but the target value is not achievable in the remainder of the CPF period due to lack of an envisaged equity investment. The volume of trade supported by IFC’s trade finance (Indicator 8) operations progressed less than expected. Finally, no progress has been made in increasing the average labor income of youth benefiting from youth employment programs (Indicator 9) since the Improving Employability and Labor Income of Youth Project (P143995) has been restructured in FY18 to reflect the new institutional framework. Pillar 2: Support Environmental and Fiscal Sustainability and Resilience to Climate Change and Economic Shocks 25. Objective 4: Strengthen capacity to manage climate change and reduce vulnerability to natural disasters. Progress towards this objective is on track. The DRM DPF that closed in 8 The Access and Renewable Energy Project was affected by limited ownership by one of the departmental governments, a lengthy process for effectiveness, institutional changes, staff turnover, and limited capacity. 9 There is progress, however, if one applies the new methodology and recalculates the baseline and target values. 7 FY16 was effective in strengthening the Government’s capacity to comprehensively manage disaster and climate risks (Indicator 10): climate change has been mainstreamed in the Government’s PDES and the Government is developing the national plan. The Government has also issued regulations mandating sectors to develop and adopt methodologies to include DRM and Climate Risk in public investment projects, with progress expected in irrigation, energy, hydrocarbons, water, sanitation and solid waste sectors. Thus, the indicator on disaster and climate risk considerations incorporated into public investment projects (Indicator 11) is on track. An important achievement was the allocation of budgetary resources to the Disaster Reduction and Response Fund (FORADE), allowing the Government to respond quickly to the floods of 2018. 26. Objective 5: Strengthen institutional capacity to improve public resource management and business environment. There has been no progress towards this objective given limited dialogue on these topics. Through the provision of TA, the World Bank supported the design of a framework for multiannual planning and budgeting, but this has not resulted in the adoption of a comprehensive medium-term vision of the national budget (Indicator 12). The budget does include medium-term expenditure projections for investment projects financed by external funding, but this is still far from a medium-term expenditure framework. There are no results to report under the improved business environment for private investment (Indicator 13). Preparation of potential DPFs to support this area have been dropped due to the deterioration of the macroeconomic framework. WBG support has been limited to the provision of just-in-time TA to respond to the Government’s recent and increased interest in improving its knowledge of PPPs. Evolution of Partnerships and Leveraging 27. Coordination with development partners has continued through the Grupo de Socios para el Desarrollo de Boliva (GruS, Bolivia Donors Group) and its sector platforms. Exchange of information among development partners is regular through the monthly GruS and sector sub- groups meetings. Parallel financing is common and coordination has taken place through the GruS sector platforms and bilateral dialogue. In health, the World Bank is re-engaging, and has taken the lead of the donor coordination group, which includes the participation of representatives of the Ministerio de Salud (MS, Ministry of Health). The Innovation and Agricultural Services Project, now closed, successfully leveraged the resources of other development agencies, specifically those of Denmark DANIDA and Switzerland COSUDE, which provided co-financing under common fiduciary arrangements, procedures and results framework. 28. The WBG will pursue opportunities for partnerships and the leveraging of resources. The Switzerland State Secretariat for Economic Affairs (SECO) has channeled trust fund resources to the World Bank to continue providing TA in urban development. These resources are supporting studies that are needed for the preparation of a proposed Urban Resilience Project (FY19). Also, a grant from the Swede Fund (SF) would finance the design of a water treatment plant in La Paz, expected to be financed by the World Bank through a proposed Wastewater Treatment and Reuse Plants Project (FY20). Prospects for leveraging private sector financing are limited given the existing legal and regulatory framework but the WBG will continue to look for emerging opportunities. Some approved projects also seek to leverage resources: the ongoing Improving Employability and Labor Income of Youth Project relies on the partnership between the Government and the private sector to insert youth into the labor market. 8 IV. EMERGING LESSONS 29. In a context of low institutional and implementation capacity, strong implementation support is key for making progress in project implementation.10 The World Bank’s Country Office has focal points for nearly all sectors, and task teams provide close implementation support. In addition to the bi-annual CPPR, portfolio implementation meetings take place monthly with the participation of the MDP. This has allowed the early identification of bottlenecks and that action be taken in a timely manner. Fiduciary and safeguards staff have continued to provide training and day-to-day guidance and supervision to local counterparts. Hands-on support in selected entities (e.g., consultants to build capacity in bidding evaluation at ABC) is starting to show results in moving forward project implementation. For the remainder of the CPF, the Bank will place greater attention to the actual implementation of measures to strengthen institutional capacity of key entities and seek opportunities to support the development and use of country systems.11 30. At the same time, new ideas and processes have been explored and put in practice to complement implementation support. For example, the Government has adopted measures to expedite public investment, e.g., eliminating the requirement for a subsidiary agreement when a project is executed by a central government level entity. The Government has also shown openness to using retroactive financing in World Bank-financed projects, given the lack of domestic resources for both project design and the implementation of initial activities. This would help executing entities hire dedicated staff to accelerate project preparation and ensure readiness for implementation. Other measures to be considered include the hiring of third-party agencies to handle procurement in sectors with weak capacity to overcome problems in compliance with World Bank fiduciary standards and requirements. The use of World Bank-administered trust funds to finance studies to support project preparation has also proven to be valuable. 31. Operations that involve sub-national governments need to ensure ownership at the local level and be calibrated to the financial and technical capacities of local counterparts. In Bolivia, projects are requested by the MDP and often conceptualized and designed by a central line ministry. For project investments that fall under the responsibility of sub-national governments, the Government usually requires these to take responsibility for debt repayment or provision of counterpart funding requirements. Often, however, sub-national entities do not actively participate in the projects’ design and preparation. As a result, ownership at the local level can be jeopardized and incentives to contribute do not materialize immediately, leading to delays in both project effectiveness and implementation. 32. Evidence points to specific criteria that can enhance project implementation. Project implementation works best when project design is straightforward, responsibility over debt repayment is with Treasury, local counterpart financing (if required) is set at reasonable levels, and the capacity of implementing entities is solid. This mix of criteria has worked well in the agriculture sector, where projects have enjoyed smooth implementation. Elsewhere, however, the definition of debt repayment responsibilities and the provision and level of counterpart funds, both responsibilities of the Ministerio de Economía y Finanzas Públicas (MEPF, Ministry of Economy 10 Bolivia’s institutional capacity is weak and implementation challenges are persistent (high staff turnover, inability to attract and retain qualified officials, limited knowledge of the regulations that apply to projects, etc.). 11 For instance, the hiring of a contract management consultancy for the roads agency ABC, the implementation of a new integrated financial management system for projects financed by donor agencies also at ABC, TA and technical staff to ease the execution of the new health project. 9 and Public Finance), have remained undefined until the last stages of project preparation. This creates both uncertainty and leads to longer preparation times. When counterpart funding of sub- national governments is significant, changing circumstances (e.g., the fall of primary commodity prices) lead to delays in implementation. Restructuring, when required, is lengthy. 33. The WBG has been flexible in responding to shifting Government priorities. It is important to continue to deepen the dialogue in areas that are key for reducing poverty, boosting shared prosperity and putting the economy on a better footing. These include, inter alia, social protection, poverty reduction, basic and social services and boosting private sector financing. Importantly, on most of these themes, the Government and the WBG have found a comfortable common space for exchanging ideas. In some cases (PPP), moreover, the Government has asked the WBG to mobilize its expertise and leverage its global knowledge. Maintaining a key strategic engagement in these areas can also allow the WBG to respond quickly when windows of opportunity open and/or priorities shift unexpectedly. V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK 34. The CPF, with some adjustments, continues to provide an adequate framework for collaboration. Objective 5 (Strengthening Institutional Capacity to Improve Public Resource Management and Business Environment) is dropped. Objective 1 (originally Reducing Transport Costs) and its related indicator, are framed in a less ambitious way since none of the investments in roads will be completed by the end of the CPF. A fourth objective under Pillar 1 is added (Improve the Information Base to Provide Quality Economic and Social Data for Public Policy Planning and Evaluation), reflecting ongoing collaboration. Other objectives remain unchanged, but their indicators are revised to reflect difficulties in portfolio implementation. As envisaged in the CPF, new areas of engagement have materialized, e.g., in the water and health sectors, where the World Bank has a solid comparative advantage and track record (in health), and which offer opportunities to address the SCD priority on reducing gaps and disparities in access to public services. As a result, Objective 2 on increasing access to select quality basic services will be strengthened. The pipeline and the planned ASA are closely aligned with Government priorities and benefit from the lessons learned to date. Moving forward, lending will depend on the implementation of the WBG program, the country economic performance, which presents some downside risks, on Bolivia’s absorptive capacity, and the World Bank’s lending capacity. 35. Pillar 1. The World Bank will consolidate its portfolio in the transport sector. The Government and the World Bank are working jointly to address the challenges that have prevented projects in the transport sector from moving forward. The focus in the remainder of the CPF period is on expediting current investments to improve transport accessibility and transitability and the conditions of the primary road network. Institutional strengthening of the roads agency, ABC, is envisaged under the ongoing Road Sector Capacity Development Project (P144597). Large contracts in the sector are expected to be awarded in the short term. Higher-level outcomes will not be achieved by the end of the CPF period (e.g., a reduction in transport costs), but less ambitious yet significant results can be achieved (e.g., reduction in the average international roughness index under the two World Bank-supported corridors). 36. Efforts will intensify on improving access to, and quality of, selected services. The Community Investment in Rural Areas AF (P127743) will provide basic social infrastructure to the most vulnerable. While the World Bank is moving away from the energy sector (the indicator 10 is being dropped), it is engaging in the water and sanitation sectors with a strong pipeline that includes three proposed projects: (i) Rural Water Access (FY19); (ii) Water and Sanitation in Peri- Urban Areas (FY20), and (iii) Sustainable Household Irrigation (FY20).12 A proposed Wastewater and Reuse Treatment Plan Project is also envisaged for the final year of the CPF (FY20). Finally, a proposed Urban Resilient Cities Project is also under preparation (FY19). Indicators in the CPF’s results framework are limited to the legacy portfolio, and therefore less ambitious than originally planned, to reflect delays in implementation and adjustments in values due to changes in the Government’s methodology to classify municipalities by poverty level. 37. Efforts will continue to support opportunities for improving income generation, access to markets and sustainable intensification. Through the Rural Alliances Project II AF, the World Bank will continue to facilitate market access for rural producers. An indicator to measure sustainable intensification (percentage of beneficiary productive alliances that apply improved agricultural technologies/practices), absent in the CPF, is being added albeit not at a high-level due to the difficulty of measuring an increase in productivity by the end of the CPF period. The IFC will continue to facilitate access to finance for MSMEs (target value revised) and trade finance (target value revised). The Improving Employability and Labor Income of Youth Project (P143995), recently restructured and relaunched, may not enjoy sufficient implementation time to impact the income of youth, hence its related indicator has changed (improvement in the placement rate of youth benefiting from skills development and labor insertion programs). 38. Improving the information base to provide quality economic and social data for public policy planning and evaluation is being introduced as a new objective (Objective 4). In the last 7 years the World Bank has been a key partner in supporting the Government’s efforts to develop core statistical operations and improve the capacity of the Instituto Nacional de Estadística (INE, National Statistical Institute). For the remainder of the CPF period, the Strengthening Statistical Capacity and the Informational Base for Evidence-Based Planning Project AF (P101336) will continue supporting the consolidation of the country’s statistical system and the provision of key information for monitoring the impact of different programs and policies on poverty incidence and inequality, among others, and for evidence-based decision making. The related indicator is quality statistical information in select areas produced and disseminated. 39. Pillar 2. The strong collaboration on environmental sustainability and resilience to climate change will continue. The effects of climate change are already visible in Bolivia and will determine the sustainability of the country’s development path. Considering Bolivia’s increasing vulnerability to climate change and natural disasters, World Bank support in this area (now Objective 5) will focus on strengthening the institutional capacity to manage disaster and climate risks and the incorporation of risk considerations in the Government’s public investment program (no change in indicators). Collaboration in this area will expand through a comprehensive flagship study on resilience to climate change, with a focus on the agriculture and irrigation, transport, urban development, energy, and water and sanitation sectors. This work will inform the active portfolio and pipeline on actions that could be taken to tackle climate change risks. 40. Support for strengthening institutional capacity to improve public resource management and the business environment has not made progress. As a result, former 12 To address potential absorptive capacity concerns in the sector and ensure readiness for implementation, a significant portion of investments have completed the pre-investment stage. 11 Objective 5 is dropped. The World Bank will continue to seek opportunities to collaborate in areas related to public resource management and the business environment. The dialogue on these topics has been limited and expected activities to support the Government in its efforts to improve the management of public resources and the investment climate have not materialized beyond the provision of just-in-time TA to increase knowledge on PPPs. The WBG will remain open to engage in this important area of work, should the Government request assistance. 41. ASA will support new lending and the policy dialogue in areas that are key for promoting inclusive growth (Table 2). Ongoing ASA will underpin the IPFs in water and sanitation. The World Bank carried out a Gender Analysis that will allow new operations to better tackle the existing gender gaps. ASA will have a stronger advocacy character in sectors or themes that are key for inclusive growth. A new Poverty Study will focus on explaining the slowing down of poverty reduction and the risk of a relapse of some segments of the population into poverty. A proposed Social Protection Study aims at strengthening systems for better targeting of social programs, should the Government’s interest materialize on this front. The planned Study on Agriculture will provide an overview of the sector’s performance in the last decade and emerging opportunities for a quantum leap in terms of efficiency and productivity. The Flagship Report on Climate Change Adaptation will provide critical analysis and policy options in key sectors. Table 2: Tentative ASA Program for FY18-19 FY18 FY19 Distributional Impact of Energy Subsidies in LC6 Opportunities for Agriculture Gender Analysis Mitigating Effects on the Poor Strengthening Delivery of Sustainable Water Services Strengthening Delivery of Sustainable Water Services for the Most Disadvantaged in Bolivia (Programmatic for the Most Disadvantaged in Bolivia (Programmatic FY17-19) FY17-19) Dialogue on PPP Flagship on Climate Change Adaptation Social Programs Beneficiary System 42. The indicative lending program for the rest of the CPF period responds to emerging Government demands and is relevant vis-à-vis SCD priorities and WBG comparative advantage. Six operations are under preparation, some of them well-advanced. The proposed Health Service Delivery Network Project is the Government’s main priority for FY18, and addresses the SCD priority of reducing gaps in access to public services. The strong pipeline for water and sanitation responds to the same SCD priority. Planned operations for water and sanitation over FY19-20 include the following: (i) Rural Water Access; (ii) Sustainable Household Irrigation; (iii) Water and Sanitation in Peri-Urban Areas, and (iv) Wastewater Treatment and Reuse Plants. The proposed Urban Resilience Project builds on ASA completed in the past 3 years and responds to the Government’s demand in this area. The volume of lending will depend on economic performance and program implementation, Bolivia’s interest in World Bank financing and absorptive capacity, and World Bank lending capacity. IFC’s pipeline in Bolivia reflects sectors that, in principle, are less correlated with political cycles and changes in public policies. 43. MIGA remains open to supporting foreign investments in Bolivia through its political risk insurance. This covers Currency Inconvertibility and Transfer Restriction, Expropriation, Breach of Contract, and War and Civil Disturbance. Opportunities for MIGA to support the private sector, and specifically FDI, will be subject to general market conditions as well as demand for MIGA insurance. At this time, MIGA does not have any outstanding exposure. MIGA had previously supported ProCredit Holding AG’s lending activities to MSMEs, the contract was 12 issued in 2011, and cancelled in late 2016 due to commercial business reasons of ProCredit Holding. VI. RISKS TO CPF PROGRAM 44. Risk to the CPF program continues to be rated as Substantial (Table 3). The CPF had identified four areas where the risk to the implementation of the partnership framework was considered Substantial or High: (i) political and governance; (ii) sector strategies and policies, (iii) institutional capacity for implementation and sustainability of WBG programs and projects, and (iv) fiduciary. In these areas, the assessment of the original risks continues to be adequate. This PLR, however, is raising the macroeconomic risk from Moderate to Substantial, in the light of new vulnerabilities on the economic front in the medium term. Other risks related to the technical design of project or program, environmental and social aspects and stakeholders continue to be Moderate, as the situation has not changed from when the CPF was prepared. 45. The macroeconomic risk is raised to Substantial, given mounting macroeconomic imbalances. The remainder of the CPF period may see a reduction of the ample buffers that Bolivia currently possesses. If this situation materializes, it could imply lower availability of counterpart funds for projects, and lower availability of resources to support the maintenance and operation of infrastructure, including those financed by the World Bank (e.g., hospitals, roads), which could undermine the achievement of projects’ development objectives. To the extent possible, as mitigation measures, the World Bank should provide full financing for investment projects to avoid putting additional pressure on the capacity of sub-national governments to provide counterpart funds. At the same time, the evaluation of project operational and maintenance expenditures should be estimated in project design to ensure that the Government allocates the required budgetary resources to implement and sustain projects’ implementation. Table 3: Risk Ratings Ratings Revised Risk Categories (H, S, M, L) Ratings Political and governance S S Macroeconomic M S Sector strategies and policies S S Technical design of project or program M M Inst. capacity for implementation and sustainability H H Fiduciary S S Environment and social M M Stakeholders M M Overall S S 13 ANNEX 1. UPDATED CPF RESULT FRAMEWORK Pillar 1: Promote Broad-Based and Inclusive Growth Objective 1: Improve Road Conditions and Increase Connectivity of Vulnerable Communities in Selected Areas CPF Indicators WBG Program Improved roads condition as measured by the International Roughness Index Ongoing financing: (IRI) for target roads in the national network (Santa Cruz-Trinidad and San ▪ Road Sector Capacity Development Project (P144597) Ignacio-San Jose) ▪ Santa Cruz Road Corridor Connector Project (P152281) ▪ National Roads and Airport Infrastructure Project (P122007) Baseline: 5 (2017) ▪ Community Investment in Rural Areas Project (PICAR) (P107137) Target: 3 (Jun. 2020) Planned ASA: Increased number of households with improved access to markets and services (number of households) ▪ Climate Change Flagship Report, policy options in transport Baseline: 13,416 (2015) Target: 50,000 (Jun. 2020) Objective 2: Increase Access to Selected Quality Basic Services for the Poorest Communities CPF Indicators WBG Program Percentage of the population in the bottom quartile of municipalities Ongoing financing: (according to the Government’s official poverty classification) benefiting ▪ Community Investment in Rural Areas Project (PICAR) (P107137) from expanded access to basic services ▪ Strengthening Statistical Capacity and the Informational Base for Evidence- Planning Project (P101336) Baseline: 8.9% (2015) ▪ Access and Renewable Energy Project IDTR II (P127837) (to be cancelled) Target: 22% (Jun.2020) Of which women: 45% of the total number of population benefited Pipeline: National Urban Development Plan completed ▪ Health Service Delivery Network Project (P164453) ▪ Urban Resilience (P165861) Baseline: no urban development strategy (2015) ▪ Rural Water Access Project (P161731) Target: (a) urban diagnostics and action plans prepared for 3 cities; and (b) a ▪ Sustainable Household Irrigation Project (P165365) strategy emanating from the PDES for intermediate cities informed ▪ Water and Sanitation in Peri-Urban Areas (P162005) (Jun.2020) ▪ Wastewater Treatment and Reuse Plants (P162305) Closed during CPF period: ▪ Urban Infrastructure Project (P083979) ▪ TF Early Childhood Care and Development in the Poorest and Most Vulnerable Urban Districts of La Paz and El Alto (P130580) 14 Ongoing ASA: ▪ Strengthening Delivery of Sustainable Water Services for the Most Disadvantaged in Bolivia (P161979) ▪ Gender Analysis Delivered ASA: ▪ Urban Development Technical Assistance (P151912) Objective 3: Improve Opportunities for Income Generation, Market Access and Sustainable Intensification CPF Indicators WBG Program Increased average volume of sales of products involved in rural alliances Ongoing financing: ▪ Rural Alliances II Project (P127743) Baseline: 0 (2014) ▪ Improving Employability and Labor Income of Youth (P143995) Target: 35 percent increase in volume marketed (Jun. 2020) ▪ Strengthening Statistical Capacity and the Informational Base for Evidence- Planning Project (P101336) Increased percentage of beneficiary members of productive alliances that ▪ IFC credit lines in financial institutions that on-lend to MSMEs apply improved technologies/practices ▪ IFC trade finance Baseline: 0 percent (Nov. 2017) Closed during CPF period: Target: 70 percent (Jun. 2020) ▪ Agricultural Innovation and Services (P106700) ▪ JSDF Integrated Community-Driven Territorial Development for Remote Increased MSMEs access to financial services (in number of MSMEs) Communities in the Amazon (P130664) Baseline: 12,000 (2015) Delivered ASA: Target: 29,000 MSMEs accessing new credit lines for productive investments (2019) ▪ Strengthening Human Talent for Science, Technology and Innovation (P150072) Volume of trade supported by trade finance (cumulative of five years in US$) Ongoing ASA: ▪ IFC Advisory Services on Business Simplification Baseline: US$34,000,000 volume of trade (Mar. 2018) ▪ Opportunities for Taking Bolivia's Agriculture Performance to the Next Target: US$55,000,000 volume of trade (Jun. 2020) Level (P167412) ▪ Gender Analysis Increased placement rate of youth benefiting from youth employment Planned ASA: programs in a job with at least the minimum salary one year after ▪ Climate Change Flagship Report, agriculture and irrigation chapter completing the training (percentage) Baseline: 0 (2017) 15 Target: 50 percent increase after one year of completing the training (Jun. 2020) Objective 4: Improve the Information Base to Provide Quality Economic and Social Data for Public Policy Planning and Evaluation CPF Indicators WBG Program Quality statistical information produced and disseminated Ongoing financing: Baseline: no updated and reliable information available for public policy ▪ Strengthening Statistical Capacity and the Informational Base for Evidence- planning and evaluation (2014) Planning Project (P101336) Target: broad range of information produced and disseminated (agricultural census and survey, economic surveys in manufacturing and services and firm-level data, household and expenditure surveys) (Jun. 2020) Pillar 2: Support Environmental Sustainability and Resilience to Climate Change Objective 5: Strengthen Capacity to Manage Climate Change and Reduce Vulnerability to Natural Disasters CPF Indicators WBG Program Government’s capacity to comprehensively manage disaster and climate Ongoing financing: risks strengthened, as measured by: Plurinational Climate Change Plan ▪ Climate Resilience - Integrated Basin Management Loan and Grant developed and operational (P129640) ▪ Road Sector Capacity Development Project (P144597) Baseline: no plan (2014) Target: Plan developed and fully operational (Jun. 2020) Pipeline: ▪ Urban Resilience (P165861) Disaster and climate risk considerations incorporated into public investment projects (independently from the source of financing) Closed during CPF period: Baseline: Public investment projects do not incorporate disaster and climate ▪ Disaster Risk Management Development Policy Credit and Loan (P150751) risk considerations (2015) ▪ TF Global Fund for Disaster Risk Reduction (GFDRR) Target: Public investment projects in at least five sectors take into account disaster and climate risk considerations (Jun. 2020) Delivered ASA: ▪ Environmental Planning of Key Economic Sectors (P154322) ▪ Study on the impacts of floods and droughts on the poor in Bolivia Planned ASA: ▪ Climate Change Flagship Report 16 ANNEX 2: MATRIX OF CHANGES TO ORIGINAL CPF RESULTS FRAMEWORK Pillar 1: Promote Broad-Based and Inclusive Growth Original CPF Objective 1: Reduce Transport Costs and Increase Connectivity of Isolated and Vulnerable Communities to the National Road Network in Selected Areas Revised CPF Objective 1: Improve Road Conditions and Increase Connectivity of Vulnerable Communities in Selected Areas Original CPF Indicators Revised CPF Indicators Rationale for Change DROPPED: Transport costs to San Buenaventura ADDED: Improved roads condition as measured Original indicator dropped due to – Ixiamas reduced (western-north corridor) by the International Roughness Index (IRI) for implementation challenges that led to a target roads in the national network (Santa Cruz- temporary stop of the National Roads and Baseline: Trinidad and San Ignacio-San Jose) Airport Infrastructure Project (P122007). Buses: $4.41 cents/Km (2014) Large trucks: $2.05 cents/Km (2014) Baseline: 5 (2017) Two new operations approved in FY16-17. Target: Target: 3 (Jun. 2020) Works will not be completed by the end of the Buses: 1.50 cents/km (2018) CPF period, so that no reduction in transport Large trucks: $0.95 cents/km (2018) cost can be measured. The IRI allows the measurement of improved road condition even if works has not yet been completed. UNCHANGED: Increased number of people with UNCHANGED improved access to markets and services (number of people) Baseline: 13,416 (2015) Target: 50,000 (2019) Objective 2: Increase Access to Selected Quality Basic Services for the Poorest Communities Original CPF Indicators Revised CPF Indicators Rationale for Change DROPPED: Increased number of people provided Indicator dropped given negligible progress due to with access to electricity by household connections delays in implementation and upcoming cancellation of operation in energy. Baseline: 0 (2015) Target: 108,000 (2019) Of which women: 50% 17 Percentage of the population in the bottom quartile REVISED: Percentage of the population in the The Government changed the methodology for of municipalities (according to the UN bottom quartile of municipalities (according to the classifying municipalities by poverty level, as a vulnerability index) benefiting from expanded Government’s official poverty classification) result geographical targeting changed. Baseline access to basic services benefiting from expanded access to basic services and target values are being adjusted accordingly. Baseline: 31% (2015) Baseline: 8.9% (2015) Target: 45% (2019) Target: 22% (Jun. 2020) Of which women: 45% of the total number of Of which women: 45% of the total number of population benefited population benefited UNCHANGED: National Urban Development UNCHANGED Plan completed Baseline: no urban development strategy (2015) Target: (a) urban diagnostics and action plans prepared for 3 cities; and (b) a strategy emanating from the PDES for intermediate cities informed (2019) Objective 3: Improve Opportunities for Income Generation, Market Access and Sustainable Intensification Original CPF Indicators Revised CPF Indicators Rationale for Change Increased average volume of sales of products REVISED: Increased average volume of sales of The end-target value is being adjusted to reflect involved in rural alliances products involved in rural alliances improved methods for calculating aggregated sales. This is measured based on actual increase Baseline: 0 (2014) Baseline: 0 (2014) in volume, not on the aggregation of percentage Target: 50 percent increase in volume marketed Target: 35 percent increase in volume marketed increases achieved per alliances, which provides (2019) (Jun. 2020) a different estimation. The adjustment also reflects the effects of climate variability. ADDED: Increased percentage of beneficiary Added to provide an indicator to measure members of productive alliances that apply sustainable intensification. Operations in this improved technologies/practices area are just starting execution, thus no increase in productivity can be realized by the end of the Baseline: 0 percent (Nov. 2017) CPF period, but this provides a sense of the Target: 70 percent (Jun. 2020) magnitude in the application of improved technologies and practices in the agriculture sector. Increased MSMEs access to financial services (in REVISED: Increased MSMEs access to financial End-target value revised downwards to reflect number of MSMEs) services (in number of MSMEs) the lack of materialization of an envisaged equity investment. Baseline: 12,000 (2015) Baseline: 12,000 (2015) Target: 69,000 MSMEs accessing new credit lines Target: 29,000 MSMEs accessing new credit lines for productive investments (2019) for productive investments (2019) 18 Volume of trade supported by trade finance REVISED: Volume of trade supported by trade Values revised due to changes in anticipated (cumulative of five years in US$) finance (cumulative of five years in US$) volumes for the rest of the CPF period. Baseline: US$96,000,000 volume of trade (2015) Baseline: US$34,000,000 volume of trade (Mar. Target: US$107,000,000 volume of trade (2019) 2018) Target: US$55,000,000 volume of trade (Jun. 2020) DROPPED: Increased average labor income of ADDED: Increased placement rate of youth Indicator dropped due to delays in the youth benefiting from youth employment benefiting from youth employment programs in a implementation of youth employment programs. programs job with at least the minimum salary one year after WB project was restructured and recently completing the training (percentage) relaunched. Indicator on labor insertion added Baseline: 0 (2015) instead. Target: 20 percent increase after one year of Baseline: 0 (2017) completing the training Target: 50 percent increase after one year of completing the training (Jun. 2020) Added Objective 4: Improve the Information Base to Provide Quality Economic and Social Data for Public Policy Planning and Evaluation ADDED: Quality statistical information produced Objective and indicators added to reflect the and disseminated continued strong collaboration in data production in an extensive set of economic and social areas. Baseline: no updated and reliable information available for public policy planning and evaluation (2014) Target: broad range of information produced and disseminated (agricultural census and survey, economic surveys in manufacturing and services and firm-level data, household and expenditure surveys) (Jun. 2020) Original Pillar 2: Support Environmental and Fiscal Sustainability and Resilience to Climate Change and Economic Shocks Revised Pillar 2: Support Environmental Sustainability and Resilience to Climate Change Objective 5: Strengthen Capacity to Manage Climate Change and Reduce Vulnerability to Natural Disasters Original CPF Indicators Revised CPF Indicators Rationale for Change UNCHANGED: Government’s capacity to UNCHANGED comprehensively manage disaster and climate risks strengthened, as measured by: Plurinational Climate Change Plan developed and operational Baseline: no plan (2014) Target: Plan developed and fully operational (2019) 19 UNCHANGED: Disaster and climate risk UNCHANGED considerations incorporated into public investment projects (independently from the source of financing) Baseline: Public investment projects do not incorporate disaster and climate risk considerations (2015) Target: Public investment projects in at least five sectors take into account disaster and climate risk considerations (2019) Objective 5: Strengthen Institutional Capacity to Improve Public Resource Management and the Business Environment Dropped Original CPF Indicators Revised CPF Indicators Rationale for Change DROPPED: Medium-term vision of the national Dropped due to no substantive activities in the budget adopted area. Baseline: Budget approved by the Legislative Assembly has an annual coverage with no reference to a medium-term expenditure framework (2015) Target: Budget approved by the Legislative Assembly includes an annex with the information about multiannual budget (2019) DROPPED: Improved business environment for Envisaged activities have not materialized. private investment, as measured by the approval and implementation of regulations in (a) administrative simplification, (b) trade and/or competition law Baseline: (2015) Target: Laws and regulations approved and under implementation (2019) 20 ANNEX 3: SUMMARY OF PROGRESS TOWARDS CPF OBJECTIVES Pillar 1: Promote Broad-Based and Inclusive Growth Objective 1: Reduce Transport Costs and Increase Connectivity of Isolated and Vulnerable Communities to the National Road Network in Selected Areas CPF Indicators Supplementary Progress Progress to Date WBG Program Indicators Indicator 1: Transport costs to San Roads constructed and rehabilitated Indicator 1: No progress Ongoing financing: Buenaventura – Ixiamas reduced (in kilometers) The length of asphalt sections ▪ Road Sector Capacity Development (western-north corridor) under the San Buenaventura- Project (P144597) Baseline: 200 (2014) Ixiamas road is only 6.5 km (out of ▪ Santa Cruz Road Corridor Connector Baseline: Target: 574 (2019) the expected 113 km). Moreover, Project (P152281) Buses: $4.41 cents/Km (2014) with the abandonment of works the ▪ National Roads and Airport Large trucks: $2.05 cents/Km (2014) quality of these sections could be Infrastructure Project (P122007) Target: affected. The future of the National ▪ Community Investment in Rural Buses: 1.50 cents/km (2018) Roads and Airport Infrastructure Areas Project (PICAR) (P107137) Large trucks: $0.95 cents/km (2018) Project is still uncertain. No reduction in transport costs will be Planned ASA: achieved by the end of the CPF period. ▪ Climate Change Flagship Report, Contracts for the rehabilitation of policy options in transport the Santa Cruz-Trinidad road (488 km) and the improvement of the San Ignacio-San Jose road (203 km) have yet to be awarded. Indicator 2: Increased number of Indicator 2: On track people with improved access to To date, 24,711 households have markets and services (number of benefited with improved access to people) markets and services. There were delays in project effectiveness, Baseline: 13,416 (2015) revisions to the program Target: 50,000 (2019) implementation schedule suggest that expected results will be achieved. So far 220 km of rural roads were improved. Objective 2: Increase Access to Selected Quality Basic Services in the Poorest Communities CPF Indicators Supplementary Progress Progress to Date WBG Program Indicators 21 Indicator 3: Increased number of Number of off grid and SHS Indicator 3: No progress Ongoing financing: people provided with access to systems installed So far, no off grid nor solar home ▪ Community Investment in Rural electricity by household connections systems were installed under the Areas Project (PICAR) (P107137) Baseline: 0 (2015) Access and Renewable Energy ▪ Strengthening Statistical Capacity Baseline: 0 (2015) Target: 9,500 grid connections Project, which faced recurrent and the Informational Base for Target: 108,000 (2019) constructed (2019) implementation challenges and is Evidence-Planning Project (P101336) Of which women: 50% 6,500 SHS installed (2019) being cancelled. To date there are ▪ Access and Renewable Energy just 3,709 beneficiaries of sub- Project IDTR II (P127837) (to be projects that provided access to cancelled) electricity under the Community Investment in Rural Areas Project. Pipeline: Indicator 4: Percentage of the Number of sub-projects Indicator 4: Change in population in the bottom quartile of successfully implemented in the methodology ▪ Health Service Delivery Network municipalities (according to the UN most disadvantaged rural In 2016 the Government replaced Project (P164453) vulnerability index) benefiting from communities the UN vulnerability index with a ▪ Urban Resilience (P165861) expanded access to basic services new indicator based on unmet basic ▪ Rural Water Access Project Baseline: 520 sub-projects (2014) needs (UBN) and gross value of (P161731) Baseline: 31% (2015) Target: 1,400 sub-projects (2019) production to classify ▪ Sustainable Household Irrigation Target: 45% (2019) municipalities by poverty level. As Project (P165365) Of which women: 45% of the total a result, the geographic targeting of ▪ Water and Sanitation in Peri-Urban number of population benefited interventions changed. The Areas (P162005) recalculated baseline and target ▪ Wastewater Treatment and Reuse values are 8.9% and 22.7% Plants (P162305) respectively. At present, 12.4% of the population in the bottom Closed during CPF period: quartile of municipalities have ▪ Urban Infrastructure Project benefited from expanded access to (P083979) basic services. 969 sub-projects ▪ TF Early Childhood Care and have been implemented in the most Development in the Poorest and Most disadvantaged rural communities. Vulnerable Urban Districts of La Paz Adjustments to the program and El Alto (P130580) implementation plan suggest that the revised indicator is on track to Ongoing ASA: be achieved. Out of the total ▪ Strengthening Delivery of population benefited, 48% are Sustainable Water Services for the women. Most Disadvantaged in Bolivia Indicator 5: National Urban Study on service provision in urban Indicator 5: Partially achieved (P161979) Development Plan completed cities developed Consistent technical assistance has ▪ Gender Analysis been provided in urban Baseline: no urban development Baseline: no study (2014) development issues. Based on the Delivered ASA: strategy (2015) Target: study developed and diagnostic report that assessed Target: (a) urban diagnostics and disseminated (2016) urbanization trends, in FY16 a ▪ Urban Development Technical action plans prepared for 3 cities; and follow up TA assessed options to Assistance (P151912) (b) a strategy emanating from the develop a National Urban 22 PDES for intermediate cities informed Development Plan. A subsequent (2019) TA on intermediate cities produced a main report that analyzes the urbanization process, proposes a new definition of intermediate cities, evaluates challenges and opportunities for these target cities, and provides recommendations for action based on global case studies. The report also presents five priority areas that could form a strategy for intermediate cities in Bolivia. SECO is providing grant funds for the preparation of an Urban Resilience IPF. And the government has informed its plan to develop a national urban development policy as a result of the recommendations of the TA. Objective 3: Improve Opportunities for Income Generation, Market Access and Sustainable Intensification CPF Indicators Supplementary Progress Progress to Date WBG Program Indicators Indicator 6: Increased average Number of households in alliances Indicator 6: Change in Ongoing financing: volume of sales of products involved that receive financing support methodology ▪ Rural Alliances II Project (P127743) in rural alliances The Government improved the ▪ Improving Employability and Labor Baseline: 858 (2014) method for calculating aggregated Income of Youth (P143995) Baseline: 0 (2014) Target: 25,000 (2018) sales. Indicator is now calculated ▪ Strengthening Statistical Capacity Target: 50 percent increase in volume Of which represented by women: based on actual increase in volume, and the Informational Base for marketed (2019) 30% not on the aggregation of Evidence-Planning Project (P101336) percentage increases achieved per ▪ IFC credit lines in financial alliances, which provides a institutions that on-lend to MSMEs different estimation. The ▪ IFC trade finance adjustment also reflects the effects of climate variability. Using the Closed during CPF period: revised methodology, the adjusted ▪ Agricultural Innovation and Services target value is 35 percent increase (P106700) in volume marketed. To date, the ▪ JSDF Integrated Community-Driven indicator reaches 37 percent. Territorial Development for Remote 23 Indicator 7: Increased MSMEs Volume of MSME outstanding Indicator 7: Partially achieved Communities in the Amazon access to financial services (in number portfolio (in US$ million) By the end of 2017 16,000 MSMEs (P130664) of MSMEs) benefited from credit lines for Baseline: US$ 321.6 million (2015) productive investment. The volume Delivered ASA: Baseline: 12,000 (2015) Target: US$ 1 billion (2019) of MSME outstanding portfolio is ▪ Strengthening Human Talent for Target: 69,000 MSMEs accessing new $740m. Indicators are expected to Science, Technology and Innovation credit lines for productive investments Number of farmers reached through be achieved by the end of the CPF (P150072) (2019) private sector transactions period. Ongoing ASA: Indicator 8: Volume of trade Baseline: 1,500 (2014) Indicator 8: Partially achieved supported by trade finance Target: 5,000 (2019) There have been changes in ▪ IFC Advisory Services on Business (cumulative of five years in US$) Number of Direct Jobs Created: anticipated volumes of trade, it Simplification Baseline: 0 (2015) currently stands at $34m. ▪ Opportunities for Taking Bolivia's Baseline: US$96,000,000 volume of Target: 1,000 (2017) Agriculture Performance to the Next trade (2015) By the end of 2017, 2,728 farmers Level (P167412) Target: US$107,000,000 volume of were reached through private sector ▪ Gender Analysis trade (2019) transactions. Job creation has not Planned ASA: realized due to project cancellation. ▪ Climate Change Flagship Report, Indicator 9: Increased average labor Indicator 9: No progress agriculture and irrigation chapter income of youth benefiting from The expansion of the skills youth employment programs development and youth employment programs has not Baseline: 0 (2015) realized. Programs in youth Target: 20 percent increase after one employment insertion suffered year of completing the training delays due to implementation challenges and changes in the Government’s approach on the topic. President Morales announced its employment policy in May 2017 and relaunched the programs. The Bank’s Improving Employability and Labor Income of Youth Project was restructured in early 2018 and is just starting implementation. Pillar 2: Support Environmental and Fiscal Sustainability and Resilience to Climate Change and Economic Shocks Objective 4: Strengthen Capacity to Manage Climate Change and Reduce Vulnerability to Natural Disasters CPF Indicators Supplementary Progress Progress to Date WBG Program Indicators Indicator 10: Government’s capacity Disaster Risk Management and Indicator 10: Partially achieved Ongoing financing: to comprehensively manage disaster Climate Change Adaptation Climate change has been ▪ Climate Resilience - Integrated Basin and climate risks strengthened, as Strategy adopted and applied in the mainstreamed in the Economic and Management Loan and Grant measured by: Plurinational Climate primary road sector by ABC Social Development Plan 2016- (P129640) Change Plan developed and 2020, and the Mother Earth operational Baseline: no strategy (2015) 24 Target: strategy applied in roads Authority is working on the ▪ Road Sector Capacity Development Baseline: no plan (2014) project handled by the ABC (2019) development of a national plan. Project (P144597) Target: Plan developed and fully Disaster Reduction and Disaster operational (2019) Response Fund (FORADE) has a Pipeline: specific resource allocation in the Indicator 11: On track ▪ Urban Resilience (P165861) Indicator 11: Disaster and climate national budget to finance DRM The Government has issued a risk considerations incorporated into activities regulation (Ministerial Resolution Closed during CPF period: public investment projects 115/2015, MDP) mandating sectors (independently from the source of Baseline: no budget allocation for to develop and adopt ▪ Disaster Risk Management financing) DRM activities (2015) methodologies to include disaster Development Policy Credit and Loan Target: Budget allocated to risk management and climate (P150751) Baseline: Public investment projects FORADE (yearly basis) change considerations in public ▪ TF Global Fund for Disaster Risk do not incorporate disaster and climate Integrated River Basin Planning investments projects, so far this has Reduction (GFDRR) risk considerations (2015) Methodology developed and been completed in irrigation Target: Public investment projects in adopted by the Government (Ministerial Resolution 480/2017, Delivered ASA: at least five sectors take into account Ministry of Environment and ▪ Environmental Planning of Key disaster and climate risk Baseline: no methodology available Water). Other sectors in which Economic Sectors (P154322) considerations (2019) (2014) progress has been done are energy ▪ Study on the impacts of floods and Target: methodology developed (regulation expected to be issued in droughts on the poor in Bolivia and adopted (2018) 2018), hydrocarbons (expected to be issued in 2018), and water, Planned ASA: sanitation and solid waste, for ▪ Climate Change Flagship Report which issuance of methodologies are expected to take place in 2019. An important achievement in this area has also been the allocation in the national budget (0.15 percent of the consolidated budget) to the Disaster Reduction and Disaster Response Fund (FORADE) which allowed the Government to quickly respond to flooding events occurred in early 2018. Funds are available for emergency attention, recovery and reconstruction activities. Under the Pilot Program for Climate Resilience, the Government developed a detailed methodology for river basin planning that includes modelling, decision-taking, etc. This was applied in the Mizque basin (rural, 25 agriculture is the main activity, water scarcity). An improved version is being applied for the planning of the Rocha River basin (water systems, populated area, industrial) with positive results. It will also be used for the Arque- Tapacarí basin planning. Once the validation process is completed, it will be formally adopted by the Ministry of Environment and Water for basin planning. Objective 5: Strengthen Institutional Capacity to Improve Public Resource Management and the Business Environment CPF Indicators Supplementary Progress Progress to Date WBG Program Indicators Indicator 12: Medium-term vision Public Investment and Strategic Indicator 12: Limited progress Ongoing financing: of the national budget adopted Planning are aligned TA supported the design of a ▪ Strengthening Statistical Capacity Baseline: There is not a development framework for multiannual budgeting and the Informational Base for Baseline: Budget approved by the plan approved (2014) and planning. At present, the budget Evidence-Planning Project Legislative Assembly has an annual Target: The public investment approved by the Legislative (P101336) coverage with no reference to a program is linked to the pillars, goals Assembly includes multiannual Closed during CPF period: medium-term expenditure framework and strategic actions of the expenditures for investment projects (2015) Government’s development plan financed by external sources only. ▪ IDF Strengthening of Planning, Target: Budget approved by the (2018) The public investment program is Investment, Fiduciary and Legislative Assembly includes an now linked to the pillars and goals of Procurement Capacities (P148830) annex with the information about the Government’s PDES 2016-2020. Delivered ASA: multiannual budget (2019) ▪ Multiannual Budgeting and Indicator 13: Improved business Indicator 13: No longer relevant Planning (P152473) environment for private investment, Dialogue in this area did not lead to a as measured by the approval and substantive program of collaboration. implementation of regulations in (a) Some progress was made though the administrative simplification, (b) Plan de Desburocratizacion del trade and/or competition law Estado, but none of the results can be attributed to Bank’s support. The Baseline: (2015) Government approved regulations Target: Laws and regulations aimed at attracting private approved and under implementation investment (supreme decree to (2019) promote PPPs in sub-national governments). The Government has not requested Bank support in public resource management and business climate beyond limited TA spur the knowledge base on PPPs. 26 ANNEX 4: MONITORING OF THE UPDATED CPF RESULTS FRAMEWORK Pillar 1: Promote Broad-Based and Inclusive Growth Objective 1: Improve Road Conditions and Increase Connectivity of Vulnerable Communities in Selected Areas CPF Indicators Indicator Description and Data Source Improved roads condition as measured by the International Roughness Index Description: the IRI measures the roughness of the road obtained from the (IRI) for target roads in the national network (Santa Cruz-Trinidad and San longitudinal road profiles. It is calculated using a quarter-car vehicle math model Ignacio-San Jose) in units of m/km using specialized equipment like bump integrators, rough meters or approximated with cell based app systems. The indicator will be Baseline: 5 (2017) calculated for the Santa Cruz - Trinidad road and the San Ignacio de Velasco – Target: 3 (Jun. 2020) San Jose de Chiquitos road. Data source: Monthly progress reports of the control and monitoring consultant on the Santa Cruz-Trinidad road, and final IRI checks by ABC and the Supervision Consultant on completed sections on the San Ignacio-San Jose road. Increased number of households with improved access to markets and Description: “Improved access to markets” is the result of the productive services (number of households) partnerships subprojects supported by PAR. Each subproject is carried out by farmers organizations comprising at least 20 households. By following through Baseline: 13,416 (2015) with the planned activities in each subproject, such as acquiring tools and Target: 50,000 (Jun. 2020) contracting technical assistance, the beneficiary households improve production as per the requirements of the selected buyers in terms of types of product, volume delivered and quality. By doing so, organized farmers strengthen their focus on commercial production and their linkages with diverse formal and informal markets. Following a similar rationale, “Improved access to services” refers to the households that have participated in community subprojects supported by PICAR. The funded subprojects cover a wide range of areas, such as basic production for food self-sufficiency, facilities for tap water, and road improvement and accessibility (e.g. bridges). “Services” is widely understood in terms of community improvements that meet basic needs (e.g. water services, sanitation services, irrigation services, transport services, production services, and so on). Data source: EMPODERAR Management Information System Objective 2: Increase Access to Selected Quality Basic Services for the Poorest Communities CPF Indicators Indicator Description and Data Source Percentage of the population in the bottom quartile of municipalities Description: The bottom quartile municipalities refers to municipalities (according to the Government’s official poverty classification) benefiting classified as A or B as per the composite ranking of unsatisfied basic needs and from expanded access to basic services gross production value. This classification was set up by the Government and is used in all investment projects addressing rural poverty. Municipalities 27 Baseline: 8.9% (2015) classified as A or B are eligible for financing under the PICAR project; the Target: 22% (Jun. 2020) denominator of the indicator is the total population of those areas, whereas the Of which women: 45% of the total number of population benefited numerator is the population benefited by the communities’ subprojects. Data source: EMPODERAR Management Information System National Urban Development Plan completed Description: the indicator measures the development of a national strategy to support the development of urban areas. The urban diagnostics and action plans Baseline: no urban development strategy (2015) for three cities are intended to have a deeper diagnostic and plan for each type Target: (a) urban diagnostics and action plans prepared for 3 cities; and (b) a of city (a main city in the eje central, a capital city outside de eje central, and strategy emanating from the PDES for intermediate cities informed (Jun. an intermediate city). The extensive ASA provided in the last years, and ongoing 2020) through the Resilient Cities project, is expected to inform a Government strategy for urban development/intermediate cities. Data source: WB products delivered to the client related to the urban development ASA program and the Government plan/strategy developed. Objective 3: Improve Opportunities for Income Generation, Market Access and Sustainable Intensification CPF Indicators Indicator Description and Data Source Increased average volume of sales of products involved in rural alliances Description: the estimate is based on sales of all subprojects supported by PAR. The increase is calculated by converting the units sold in each type of subproject Baseline: 0 (2014) into kilograms, using standard coefficients, and aggregating the total volume for Target: 35 percent increase in volume marketed (Jun. 2020) each measurement. For instance, milk sales, originally in liters, are converted to kilograms by multiplying the value in liters by 1.04; egg sales expressed in number of eggs are multiplied by 0.06. The final aggregated volume after the intervention is compared with the volume of sales at entry. Data source: EMPODERAR Management Information System Increased percentage of beneficiary members of productive alliances that Description: the indicator refers to the beneficiaries of subprojects supported by apply improved technologies/practices PAR. The provision of technical assistance is an integral part of each business plan, which ultimately is expected to help farmers better achieve markets Baseline: 0 percent (Nov. 2017) demands (type of product, volume and quality). The indicator is reported by Target: 70 percent (Jun. 2020) means of the project’s information system, which records recurrent surveys that assess the extent to which farmers are adopting improved technologies and practices, such as vegetal varieties, improved pest control schemes, improved irrigation technology, and so on. The technologies/practices cover the spectrum from primary production (agronomic practices) to storing and pro-processing. Data source: EMPODERAR Management Information System 28 Increased MSMEs access to financial services (in number of MSMEs) Description: number of outstanding loans supported by IFC operations as of end 2019. Baseline: 12,000 (2015) Target: 29,000 MSMEs accessing new credit lines for productive Data source: reach indicators self-reporting that IFC clients have to do on an investments (2019) annual basis. Volume of trade supported by trade finance (cumulative of five years in Description: cumulative value of Trade Finance Guarantees supported by IFC US$) committed during the last five years. Baseline: US$34,000,000 volume of trade (Mar. 2018) Data source: reach indicators self-reporting that IFC clients have to do on an Target: US$55,000,000 volume of trade (Jun. 2020) annual basis. Increased placement rate of youth benefiting from youth employment Description: the indicator will measure the percentage of youth that has a job programs in a job with at least the minimum salary one year after with at least the national minimum wage after one year of having received the completing the training (percentage) training in employability skills under the Improving Employability Project. Baseline: 0 (2017) Data source: entry data will be collected by the Program’s Beneficiary Target: 50 percent increase after one year of completing the training (Jun. Registry. Data collected after one year of receiving the training will be 2020) provided by a follow up survey to be hired by the MDP. Objective 4: Improve the Information Base to Provide Quality Economic and Social Data for Public Policy Planning and Evaluation CPF Indicators Indicator Description and Data Source Quality statistical information produced and disseminated Description: the indicator measures the set of information generated and publicly disseminated related to economic and social statistics. Baseline: no updated and reliable information available for public policy planning and evaluation (2014) Data source: INE Target: broad range of information produced and disseminated (agricultural census and survey, economic surveys in manufacturing and services and firm-level data, household and expenditure surveys) (Jun. 2020) Pillar 2: Support Environmental Sustainability and Resilience to Climate Change Objective 5: Strengthen Capacity to Manage Climate Change and Reduce Vulnerability to Natural Disasters CPF Indicators Indicator Description and Data Source Government’s capacity to comprehensively manage disaster and climate Description: a national Climate Change Plan developed by the Mother Earth risks strengthened, as measured by: Plurinational Climate Change Plan Authority. developed and operational Data source: Mother Earth Authority. Baseline: no plan (2014) Target: Plan developed and fully operational (Jun. 2020) 29 Disaster and climate risk considerations incorporated into public investment Description: the indicator measures the implementation of the MDP’s projects (independently from the source of financing) Ministerial Resolution 115/2015 that mandates sectors to develop and adopt methodologies to include disaster risk management and climate change Baseline: Public investment projects do not incorporate disaster and climate considerations in their public investment programs and projects. risk considerations (2015) Target: Public investment projects in at least five sectors take into account Data source: Ministerial resolutions approved in the different sectors disaster and climate risk considerations (Jun. 2020) developing and adopting methodologies to include disaster risk management and climate change considerations in public investments projects. 30 ANNEX 5: KEY ECONOMIC INDICATORS 2010 2011 2012 2013 2014 2015 2016 2017 Real sector GDP growth (%) 4.1 5.2 5.1 6.8 5.5 4.9 4.3 4.2 Nominal GDP (US$ billion) 19.6 24.0 27.1 30.7 33.0 33.0 33.9 37.5 Investment (% of GDP), of which 16.6 19.0 18.4 19.1 21.0 21.4 20.7 21.3 Public investment 9.5 10.5 10.5 11.3 12.4 13.5 12.9 13.0 Private investment 7.1 8.4 7.8 7.7 8.6 7.9 7.7 8.3 Natural gas production (Million cubic meters per day) 42.9 44.6 51.2 59.0 63.1 60.8 56.6 54.4 Memo item: Oil price (US$ per barrel, p.a) 79.4 95.1 94.2 97.9 93.1 48.7 43.2 53.1 External accounts, % of GDP, unless otherwise indicated Current account balance 3.9 0.3 7.3 2.4 1.7 -5.9 -5.7 -6.3 Resource balance, of which 5.9 3.6 12.7 7.1 8.8 -1.2 -2.6 -2.3 Exports of goods and non financial services (GNFS) 34.3 36.7 44.4 38.7 38.8 26.3 20.6 20.7 o.w. gas exports 14.2 16.2 20.2 19.9 18.2 11.4 6.0 6.9 Imports of GNFS 28.5 33.1 31.7 31.6 30.0 27.5 23.2 22.9 Foreign direct investment, net 3.4 3.6 3.9 5.7 2.1 1.7 0.7 1.7 International reserves (US$ billion) 9.7 12.0 13.9 14.4 15.1 13.1 10.1 10.3 International reserves (Months of Imports) 17.3 16.4 13.9 14.6 14.2 18.0 17.3 15.9 Fiscal accounts, % of GDP, unless otherwise indicated Non Financial Public Sector (adjusted) * Total revenues 33.2 36.2 37.8 39.1 39.9 37.7 33.2 30.8 Hydrocarbon revenues 20.8 20.0 22.4 23.6 24.2 18.6 13.8 12.9 Total expenditures 31.5 35.4 36.0 38.4 43.3 44.6 39.7 38.6 Current expenditures 22.8 24.2 25.1 24.9 28.2 29.1 24.9 25.1 Capital expenditures 8.7 11.2 11.0 13.5 15.0 15.5 14.8 13.5 Overall balance 1.7 0.8 1.8 0.6 -3.4 -6.9 -6.6 -7.8 External financing 1.0 1.8 2.3 2.5 1.3 1.7 1.9 5.7 Domestic financing -2.7 -2.6 -4.1 -3.1 2.0 5.2 4.6 2.2 Public liabilities and assets Gross public debt** 39.5 36.9 36.7 37.3 38.0 41.6 45.8 49.9 Public sector's deposit at the Central Bank 21.2 22.0 25.4 26.6 24.4 20.8 18.8 16.7 Monetary and financial sector, percent, unless otherwise indicated CPI inflation (e.o.p.) 7.2 6.9 4.5 6.5 5.2 3.0 4.0 2.7 Broad money growth (M3, % of GDP) 12.5 17.7 20.2 16.2 15.6 16.2 2.6 10.2 Real exchange rate depreciation (e.o.p., +=depreciation) -2.3 -6.5 -1.3 -12.1 -9.2 -9.4 0.5 5.1 Deposits (% of GDP) 44.6 43.9 47.4 50.4 54.6 65.5 66.2 66.1 Domestic credit (% of GDP) 36.1 36.8 38.8 40.7 43.6 51.3 59.0 60.0 Non-performing loans (% of total loans)*** 2.2 1.7 1.5 1.5 1.5 1.5 1.5 1.6 Return on equity ratio*** 1.4 1.5 1.4 1.1 1.2 1.0 1.0 1.0 Return on assets ratio*** 17.3 19.5 17.6 14.2 16.9 15.1 15.3 14.5 Poverty and inequality, % of population, unless otherwise indicated Poverty .. 45.1 43.3 38.9 39.1 38.6 39.5 .. Urban .. 36.8 34.7 28.9 30.5 31.0 31.6 .. Rural .. 61.9 61.2 59.9 57.5 55.0 56.9 .. Extreme poverty .. 21.0 21.6 18.7 17.1 16.8 18.3 .. Urban .. 10.8 12.2 9.1 8.3 9.3 10.0 .. Rural .. 41.8 41.1 38.8 36.1 33.3 36.6 .. Gini (Coefficient) .. 0.47 0.47 0.48 0.49 0.47 0.47 .. Notes: (*) The fiscal accounts are those of the Non Financial public sector, adjusted to reflect the operational balance of the public enterprises as revenue; (**) Public sector debt includes all financial obligations of the central government and subnational governments as well as liabilities of non-financial state-owned enterprises to the central bank; (***) The 2013 Financial Services Law reorganized the financial sector by turning some financial institution into commercial banks, which are now known as multiple banks. Source: Central Bank of Bolivia, National Statistical Institute, International Monetary Fund, Financial System Supervisory Authority (ASFI), Global Economic Monitor, and staff estimates. 31