This Selected Issues paper and Statistical Annex identifies the sources of bank problems in Bolivia. It describes the measures to strengthen the system since 1985, and assesses the early results of bank restructuring in 1994–96. The paper highlights that prior to 1985, financial intermediation was subject to extensive controls on both interest rates and the allocation of credit, and hyperinflation distorted bank credit decisions even further. The paper also describes the basic features of the old pension system of Bolivia, and reviews the main innovations of the new system.

This Selected Issues paper on Bolivia reports that it has experienced major increases in its gas reserves, production, and exports. Not only have their levels increased significantly, but also there have been extensive regulatory changes, which range from the privatization of the mid-1990s to the increase in the government’s tax take from the hydrocarbons industry. The government has reached new agreements with foreign oil companies that will allow foreign companies to continue recovering part of their old investments.