By: Luis Carlos Jemio Ph.D.*

In October 2025, the National Institute of Statistics (INE) presented the updated national accounts for the country, a project that received technical support from ECLAC and the IMF. The new series of national accounts published by the INE includes significant methodological changes. First, the previous fixed-base GDP calculation system, which used 1990 as the base year for calculating GDP at constant prices, has been replaced by the chained variable-base system, the most widely used system in the world. Second, the INE undertook a significant statistical effort to calculate the updated national accounts, resulting in broader coverage of the national economy, including activities previously excluded from the calculation.

This new series of national accounts has resulted in a redefinition of the size of the economy, and therefore changes in the value of several commonly used macroeconomic variables and indicators, relative to their values calculated using the 1990 fixed-base GDP series, such as: GDP level, GDP per capita, GDP growth, fiscal deficit, public debt, etc. The following sections analyze some of the effects of the change in the national accounts series on these variables and indicators.

Nominal GDP and GDP per capita

As mentioned earlier, the calculation of the new national accounts series represents a significant statistical effort by the INE, which allowed for the inclusion of activities previously excluded from GDP calculations. As a result of this broader coverage, nominal GDP increased between 15% and 20% compared to the values in the previous series. Thus, nominal GDP in 2024 reached US$54,487 million (using the official exchange rate for this calculation), 17.7% higher than the value calculated using the previous fixed-base methodology.

Nominal GDP

(millions US$)

Source: Prepared based on information from the INE

 

As a result of the change in the nominal value of GDP, there has also been a change in Bolivia’s GDP per capita. Using the previous series, GDP per capita for 2024 reached US$4,073 per inhabitant, while with the new series it stands at US$4,794 per inhabitant (17.7% higher).

GDP per capita 2024

(US$ per inhabitant)

Source: Prepared based on information from the INE

 

GDP growth

Another indicator that has varied with the methodological change in the calculation of national accounts is the real GDP growth rate. There are differences in the formula for calculating the GDP growth rate between the two methodologies:

a.In the fixed-base system, which in the case of Bolivia’s national accounts was 1990, the formula used is:

              b.In the chained series system, the formula used is:

Where:

 

gbf_t : GDP growth rate for year t, relative to year t-1, fixed base system

gse_t: GDP growth rate for year t relative to year t-1, chained series system

P₀ : prices from base year 0 (year 1990 in the case of Bolivia)

P_t—1: prices for year t-1

Q_t : quantities produced in period t

Q_t—1  : quantities produced in period t-1

 

Real GDP growth

(annual % change)

Source: Prepared based on information from the INE

 

There are some noteworthy aspects to consider when examining the two GDP growth series. First, it is striking that the GDP decline in 2020, as a result of the COVID-19 pandemic, is significantly higher when calculated using the new methodology (-12.72%) compared to the previous methodology (-8.7%). Conversely, the GDP growth rate in 2021, resulting from the economic recovery from the pandemic’s effects, is also considerably higher when calculated using the new methodology (10.03%) compared to the fixed-base methodology (6.11%). This is due to the greater weight of the sectors that experienced the largest declines during the pandemic (services and construction) in GDP.

Another striking aspect is that, with the new methodology, a GDP decline had already occurred in 2024 (-1.12%), which was not the case when growth was calculated using the previous methodology (0.73%). This shows that the economy was already in recession in 2024, registering negative growth rates for two consecutive quarters. This is also due to the greater weight of extractive activities in GDP today, which experienced the largest declines in 2024 and 2025.

 

Fiscal Deficit and Public Debt

Finally, other indicators that also changed when calculated using the new GDP series are the fiscal deficit and public debt. Since nominal GDP is higher when calculated with the new methodology, the fiscal deficit is lower as a percentage of GDP. As can be seen in the following graph, the deficit for 2024, which reached 10.2% of GDP when calculated using the nominal GDP of the 1990 fixed-base series, is reduced to 8.7% of GDP with the GDP of the new series. This does not mean, of course, that the country’s fiscal situation is less critical, but rather that the analysis of this and other economic issues must be adjusted to these new values for these indicators, since fiscal targets and rules are usually set as a percentage of GDP.

 

SPNF deficit

(percentage of GDP)

Source: Prepared based on information from the MEFP and INE

 

Another indicator closely linked to the previous one is the debt-to-GDP ratio. This is a key indicator for assessing the sustainability of public debt, as an upward trend in this indicator would show that the debt is on an unsustainable trajectory. Conversely, if this ratio remains stable or tends to decrease, the debt would be in a sustainable situation. This indicator is usually included as a target in the fiscal rules and fiscal responsibility laws that countries adopt to ensure fiscal sustainability.

As can be seen in the following graph, the debt-to-GDP ratio reached 82.0% of GDP in 2024, using the GDP from the previous fixed-base series, while with the new series, the ratio falls to 69.7% of GDP. Again, this change does not mean that the sustainability of public debt in Bolivia has improved, but rather that this issue should be analyzed considering these new values for this indicator.

 

 Public Debt

(percentage of GDP)

Source: Prepared based on information from MEFP, BCB and INE

 

In summary, the new series of national accounts recently published by the represents a significant methodological advance, as it places Bolivia among the countries using this new system, which is employed in most countries. Furthermore, an effort has been made to broaden the coverage of the accounts to include a larger share of economic activities, leading to a redefinition of the size of the economy and GDP. This, of course, has modified the values of some variables and indicators commonly used in economic analysis and evaluation.

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* Senior Researcher at INESAD, ljemio@inesad.edu.bo

This blog is part of the ADÁMAS ECONÓMICO Project.

The views expressed in the blog are those of the authors and do not necessarily reflect the position of their institutions or INESAD.

By: Luis Carlos Jemio Ph.D.*

The fiscal deficit has been the factor that most contributed to the profound economic crisis affecting the Bolivian economy. From 2015 to 2024, the NFPS deficit averaged 8.7% of GDP annually. These deficits have been financed primarily from domestic sources (approximately 80%). Of the total domestic financing, approximately 80% came from the Central Bank, and the remainder from other sources, primarily the placement of TGN bonds in pension funds.

In 2025, the government has continued its policy of maintaining a high fiscal deficit, financing it primarily through domestic sources (the Central Bank and pension funds). However, the Ministry of Economy and Public Finance (MEFP) has not published any data on NFPS operations for this year to date, despite the importance and necessity of having this information to monitor economic performance, especially in the current situation, when a change of government is approaching, and the new authorities will be responsible for correcting this significant imbalance.

However, it is possible to estimate the fiscal deficit for 2025 based on available data on the evolution of public debt, both external and domestic, published by the Central Bank and the Ministry of Economy through July. According to this information, during the January-July 2025 period, the NFPS received total financing of US$2.604 billion (4.64% of GDP), an amount equivalent to the fiscal deficit incurred during this period. As has been the trend in recent years, financing came mainly from domestic sources (4.25% of GDP), of which US$1.191 billion (2.12% of GDP) was financed by the Central Bank of Bolivia (BCB) and US$1.196 billion (2.13% of GDP) came from private sources, mainly pension funds. Net external financing was only 0.39% of GDP (US$218 million), of which US$764 million were new disbursements and US$547 million were amortizations.

 

Estimated funding to the SPNF as of July 2025 (flows)

	Millions of US$	% of GDP
Internal Debt	2,387	4.25
Private	1,196	2.13
BCB	1,191	2.12
External Debt	218	0.39
Disbursements	764	1.36
Amortizations	547	0.97
Total	2,604	4.64

Source: Prepared based on information from the MEFP and BCB

 

The question is: how large could the fiscal deficit be for the entire year 2025, given the deficit reached through July? The following chart shows, first, that the deficit for the January-July period has been increasing in recent years. Second, it is observed that the majority of the deficit is generated in the second half of the year, due to the fact that a majority of public spending is concentrated in the final months of the year, as is the case with the payment of end of the year bonuses. For this reason, the fiscal deficit for 2025 is expected to be at levels similar to or higher than those reached in 2023 and 2024, that is, above 10% of GDP.

 

Annual SPNF deficit and as of July of each year

(percentage of GDP)

Source: Prepared based on information from the MEFP and BCB

* estimated

 

The high fiscal deficit observed through July 2025 will once again increase public debt, which has been steadily growing in recent years. By July 2025, it will reach US$44.06 billion, of which US$30.289 billion is domestic debt and US$13.77 billion is external debt. It is interesting to note that, although public debt has continued to grow in absolute terms through 2025, it has shown a significant decline as a percentage of GDP. This is because domestic debt is primarily denominated in bolivianos and is not indexed to the dollar or inflation. Nominal GDP has continued to grow at increasingly higher rates due to the higher inflation experienced by the Bolivian economy, although the real GDP growth rate is becoming increasingly lower.

 

SPNF debt

(US$ millions)

	2022	2023	2024	by July 2025
Internal Debt	17,266	22,551	27,903	30,289
Private	6,805	8,025	9,380	10,576
BCB	10,462	14,525	18,523	19,714
External Debt	13,300	13,588	13,345	13,770
Total debt	30,567	36,139	41,248	44,060
Total Debt (% of GDP)	70.0	80.6	89.1	78.5

Source: Prepared based on information from the MEFP and BCB

 

In summary, public debt has continued to increase in absolute terms throughout 2025, due to the fiscal deficit remaining at high levels. As of July of this year, total financing to the NFPS, both external and domestic, amounts to US$2.604 billion (4.64% of GDP), which would be equivalent to the accumulated NFPS deficit for the year up to that month. With this additional financing, public debt as of July 2025 reached US$44.06 billion, mostly non-indexed domestic debt. Therefore, the debt-to-GDP ratio would have fallen to 78.5% of GDP, due to the higher inflation rate experienced by the economy, which is increasing GDP in nominal terms and reducing the real value of domestic debt. The biggest losers from this behavior are the holders of BCB liabilities, primarily the money in circulation that is losing value due to higher inflation, and the members of the pension system, whose pension contributions have been invested in non-indexed public debt securities.

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* Senior Researcher at INESAD, ljemio@inesad.edu.bo
This blog is part of the ADÁMAS ECONÓMICO Project.
The views expressed in the blog are those of the authors and do not necessarily reflect the position of their institutions or INESAD.

 

By: Luis Carlos Jemio Ph.D.

 

Historically, Bolivia’s economic growth patterns have depended on export commodity sectors, namely minerals and hydrocarbons, which booms and collapses have determined the behavior of the economy as a whole. Past economic growth patterns have resulted in distorted economic structures, and did not promote better labor market results. In particular,  employment remains heavily concentrated in low-productivity activities, mostly in non-tradable sectors, with high poverty incidence, such as traditional agriculture and urban informal sectors.  The historical patterns of Bolivia’s economic growth have also produced large labor productivity gaps among different sectors of the economy, and within them. In Figure 1, sectors are grouped based on their labor intensity, differentiating them between labor intensive and non-labor intensive sectors.

Figure 1 shows that in 2014, 49.4% of GDP was concentrated in labor-intensive activities, while 50.6% in non labor-intensive activities. Employment, on the other hand, was largely concentrated on labor-intensive activities, which comprised 81.4% of total employment, while non labor-intensive activities only comprised 18.6% of the occupied population.  These GDP and labor structures imply large productivity gaps between the two sector groups, being the average productivity in non labor-intensive sectors 4.5 times larger than that in labor intensive sectors. The productivity gap in turn brought about labor income disparities, with workers employed in non labor-intensive activities earning 2.5 more than those in labor-intensive sectors.

The observed growth patterns of the Bolivian economy, and the economic and employment structures resulting thereafter, have been the outcome of policies implemented in the past. Independent of the ideological orientation of successive governments, policies invariably focussed on promoting growth in non labor-intensive commodity-exporting activities, such as mining and hydrocarbons. For instance, due to the various reforms implemented during the 1990s, FDI flows to those sectors in the 1999-2014 period, almost tripled FDI flows received by labor-intensive sectors.

The productivity and income gaps existing among activity sectors, resulting from Bolivia’s historic growth patterns, overlap with poverty incidence existing among workers of these two group categories. Figure 2 shows that poverty incidence of workers in labor-intensive sectors is 39.4%, while that for workers in non labor-intensive sectors is only is 15.5%.

Existing productivity and income gaps between these two sector groups are linked to various socio-economic dimensions that characterize the Bolivian labor force, including workers’ informality condition, educational level, gender, ethnicity, geographic location among the most important.

For instance, there are large educational differentials between workers in the two sector groups. In labor-intensive sectors the share of non-skilled workers in total employment is 62.4%, while this share is only 39% in non labor-intensive sectors. The later highlights the importance of education as a means to increase labor productivity and labor earnings and thus reduce poverty incidence.

Existing gaps are also linked to the prevalence of informality among workers belonging to the two sector groups. According to Figure 2, in 2004 77.3% of workers in non labor-intensive sectors were employed in informal activities, while 45.8% of workers employed in non labor-intensive sectors were informal. Informality is measured considering workers in firms with up to four workers (excluding professionals). In this regard, informality can explain productivity and income gaps between and within any particular activity sector. In many sectors, mostly labor-intensive ones, there are formal and informal activities coexisting, with former exhibiting larger productivity and income levels than the later.

Furthermore, the shares of vulnerable groups, such as women and indigenous people, among workers in the two sector groups show that vulnerable groups are mostly employed in labor-intensive sectors, where productivity and incomes are lower, and poverty incidence and informality are higher. The share of women employed in labor-intensive sectors is 44.9%, while this percentage is as low as 25% in non-labor intensive activities.  Likewise, share of indigenous people employed in labor-intensive sectors is 42.5%, while this percentage is only 20.7% for non labor-intensive activities.

From the above analysis, it is clear that Bolivia requires a change in its economic growth pattern to one, which would promote growth based on labor-intensive activities, but with higher productivity, probably in tradable sectors, such as the manufacturing sector. In 2014, manufacturing activities comprised 17.5% of GDP and only 9.3% of employment, being its labor productivity on average more than three times greater than that in other labor-intensive activities.

The development strategy and policies necessaries to promote the required change, at the macro, sectoral and micro levels, need to be carefully designed and implemented. They have to cover a wide range of areas. Appropriate policies  should cover: i) macroeconomic policies, including tax, exchange rate and monetary policies aimed at maintaining macroeconomic stability and promoting competitiveness; ii) trade policies and integration to the global economy; iii) FDI promotion policies to strategic sectors of the economy; iv) sectoral allocation of public investment, mainly to infrastructure and public services; v) setting-up strong and stable institutions to guarantee contract enforcement and the rule of law; vi) improving the overall business climate; vi) and investing in human capital through improving the access to and quality of education and health services.

 

 

 

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Next week I will be participating in the 20th Anniversary Event for the Joint-Japan/World Bank Graduate Scholarships (JJ/WBGS) Program that will take place in Tokyo, Japan on June 6th. Thanks to this Program I was able to undertake my Ph.D. studies at the Institute of Social Studies in The Hague-The Netherlands.

In its 20 years of existence, the JJ/WBGS Program has awarded 2,586 scholarships, selected from nearly 53,000 applicants from all over the world. Since the inception of the Program, the Government of Japan has provided over 174.1 million dollars to the Scholarship Program, being the Program’s objective to help create an international community of highly trained professionals working in the field of economic and social development.

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