Macroeconomic Stability, Increased Productivity and Public Policy Integrity, Keys to Overcoming COVID-19 Crisis in Bolivia

Two experts from CAF—development bank of Latin America— participated in the Bolivian Conference on Economic Development(BCDE-2020) which, due to the current COVID-19 pandemic, was held online on July 27 and 28.

CAF’s Directorate of Socio-Economic Research senior economist Gustavo Fajardo outlined the results of the data yielded by the 2019 Economy and Development Report (EDR) and focused on the keys to preventing corruption in the region. The publication contains four pillars to support a corruption prevention strategy through a series of comprehensive public policies.

First, there must be rules in public service to restore the value of public servants, giving them autonomy in their work, while cracking down on impunity in the face of irregularities. Then there is the importance of mechanisms to enable access to public service, both for appointed and publicly elected positions. As the third mainstay, CAF’s study raises the need to improve transparency and citizen oversight tools through regulations that enable the disclosure of information, as well as state digitalization. The fourth factor is related to the governance of the interaction between the private and the public sectors, in order to implement rules that incentivize integrity in the private sector, especially in the area of infrastructure.

On BCDE-2020’s second day, CAF director of macroeconomic studies Adriana Arreaza outlined the challenges the country will be facing after the pandemic in a discussion panel onHow to Optimize COVID-19 Strategies in the Long Term. Arreaza shared the floor with London School of Economics professor Francisco Ferreira, as well as with University of Namur’s Vincenzo Verardi and University of Chile’s Rómulo Chumash.

Arreaza noted that the foremost challenge to take on following the pandemic, has to do with “ensuring medium-term macroeconomic stability, underpinning productivity growth and deepening social progress". She then added that the first item is necessary to ensure medium-term growth, and recommended nations to generate better conditions for participation of private domestic companies, which can have an impact on offsetting low revenues from natural resources, especially natural gas.

In terms of Bolivia’s large informal job market and its impact on productivity indicators, the expert raised the possibility of improving the business environment to incentivize sustained growth, based on productivity gains. “A regulatory framework should be developed to help change the focus of the model and encourage greater private sector participation in the economy, raise productive investment and drive greater trade openness,” Arreaza said. Lastly, she emphasized the country’s need to bolster the social progress that has been achieved over the past few years.

BCDE 2020 was organized by SDSN-Bolivia, the Society of Bolivian Economists (SEBOL), the Bolivian Academy of Economic Sciences (ABCE), the Bolivian Private University (UPB) and the INESAD Foundation. The event was sponsored by the Solydes Foundation.