PEP researchers in Bolivia hold national conference to discuss how currency devaluation can boost growth and employment

February 12, 2020 | La Paz, Boliva

A team of local PEP researchers held a national policy conference to share their recommendations for how currency devaluation can boost growth and employment in Bolivia.

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February 12, 2020 – A team of local PEP researchers held a national policy conference to share their recommendations for how currency devaluation can increase growth and employment in Bolivia.

The event attracted 119 attendees, including representatives of the Ministries of Economy and Public Finance, of Productive Development and the Plural Economy, and of Development Planning. Additionally, representatives of national and international NGOs – including the ILO, IMF and the US Embassy in Bolivia – as well as academic and research institutions and the media attended. 

The team presented findings and recommendations from their PEP study that sought to understand the implication on growth and employment of Bolivia's exchange rate policy, selected under the PAGE II initiative in 2018. See PEP Policy Brief 210 for findings and policy implications.

The researchers explained that devaluing the exchange rate by 15% while also reducing government expenditures by 15% could help boost growth and employment in Bolivia. The team’s simulation of this scenario showed annual average GDP growth of 3.5% between 2020 and 2025 while the rate of inflation remained low. 

The Vice-Minister of the Treasury and Public Credit congratulated the team for their work, stating that he was pleased the research could provide quantitative implications for the exchange rate policy in Bolivia. Highlighting the team’s contribution, he said that the study provides a basis for discussions on modifying the exchange rate but specified that there are currently no plans to change the rate.

The General Manager of the National Chamber of Exporters (CANEB) was also glad to have the results and agreed with the research team that the exchange rate policy must be changed before a balance of payments crisis occurs. The Director of CANEB agreed that a shock policy is neededbut added thatit is already too late to avoid the economic and political costs of devaluation.

Several journalists attended the event, including representatives of the Página Siete and El Diario newspapers, who reported from the event.

 

The research team organized the event with financial and advisory support from PEP. The event was hosted at and in collaboration with INESAD (Institute for Advanced Development Studies) in La Paz, Bolivia.

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