BOLIVIA

Bolivia’s Political Constitution (CPE), approved in 2009 by referendum, defines Bolivia as a Unitary Social State of Pluri-National Communitarian Law, divided into four powers: executive, legislative, judicial and electoral. The executive power is exercised by the president (head of state), the vice-president and the ministers of state. The president and vice-president are elected by universal suffrage and serve a five-year term. Both can be re-elected only once. The Pluri-National Legislative Assembly is chaired by the vice-president. It is composed of two chambers: the chamber of senators with 36 members (four representatives from each department) and the chamber of deputies with 130 members (half elected by direct vote and the other half elected indirectly from a list headed by the candidate for president). Judicial power is exercised by the Supreme Court of Justice, its courts and the indigenous native peasant jurisdiction. The highest electoral authority is the seven-member Supreme Electoral Tribunal, elected by the Plurinational Legislative Assembly.

Bolivia is a unitary country organised into departments, provinces, municipalities and rural native indigenous territories (CPE Art. 269). In addition, the Constitution recognises four types of autonomous government in its political organisation: departmental, municipal, regional and rural indigenous territories. Within this framework, there are 9 Autonomous Departmental Governments (GAD or Gobiernos Autónomos Departamentales), 337 Autonomous Municipal Governments (GAM or Gobiernos Autónomos Municipales), 3 Rural Native Indigenous Autonomous Authorities (AIOC or Autonomías Indígenas Originarias Campesinas) and 1 Autonomous Regional Government.

The process of decentralisation began in 1994 with the Popular Participation Law, which recognises, promotes and consolidates the process of popular participation by integrating indigenous, peasant and urban communities into the legal, political and economic life of the country (Law 1551 Art.1). In 2010, this law was replaced by the Autonomy and Decentralisation Framework Law 031, "Andrés Ibáñez", designed to regulate the autonomous regimes and the bases of the State’s territorial organisation. This law establishes the parameters that govern the territorial organisation. Thus, it determines that the rural native indigenous territories are peoples and nations that existed prior to invasion or colonisation and constitute a socio-political unit, having historically developed, with their own organisation, culture, institutions, law, rituals, religion, language and other common and integral characteristics (Law 031 Art. 6 III). However, these territories only acquire this status after having complied with the procedure established in Articles 393 to 404 of the CPE. The process begins with an application to become a Rural Indigenous Autonomous Authority (AIOC) where proof of ancestry and verification of economic, cultural and institutional unity are presented. The next step is the drawing up of a statute of autonomy for final approval by referendum.

On the other hand, the law provides that an Autonomous Regional Government must promote economic and social development in its jurisdiction through the regulation of departmental public policies (Law 031 Art 7). The creation and formation of new territorial units must be approved by law in the Plurinational Legislative Assembly. There are currently three Rural Native Indigenous Authorities: Charagua Iyambe in the department of Santa Cruz, Uru Chipaya in Oruro, Raqaypampa in the department of Cochabamba and one Regional Autonomous Government: Gran Chaco. 6 indigenous communities have a Full Declaration of Constitutionality (i.e., they presented their statutes to the Plurinational Constitutional Tribunal and the population approved them by referendum), but their statutes are currently in the process of being approved.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
337 autonomous municipal governments (gobiernos autónomos municipales) 3 rural native indigenous autonomous authorities (autonomías indígenas originario campesinas)	autonomous regional government Gobierno autónomo regional (Gran Chaco)	autonomous departmental governments Gobiernos autónomos departamentales
Average municipal size: 34 226 inh.
340	1	9	350

OVERALL DESCRIPTION: Bolivia is administratively and politically divided into nine departments, one region and 340 municipalities, three of which are rural native indigenous communities.

REGIONAL LEVEL: Autonomous departmental governments are headed by a departmental Assembly and an executive body presided over by a governor in charge of implementation (CPE Art. 277 and Law 031 Art. 30). The Assembly is composed of members elected by universal suffrage, members elected by proportional representation and members elected by the rural native indigenous communities residing in the department. The executive body, including the governor, is elected by universal suffrage for a five-year term. The nine departments are further divided into 112 provinces which do not constitute self-governments and are administered by a sub-governor appointed by the respective department governor.

INTERMEDIATE LEVEL: Regional autonomies correspond to several provinces or municipalities with geographical continuity that cross departmental borders and share the same culture, language, history, ecology and/or ecosystems. A region constitutes an area of planning and management and is governed by a regional assembly and an executive body appointed by the regional assembly and responsible for the implementation of planning and management (CPE Art. 281). Members of the regional assembly are elected in equal numbers for each municipality along with the lists of candidates for municipal councillors. The regions have seats in the departmental Assembly. These are allocated to members elected by the rural native indigenous communities living in the municipalities of the region (Law 031 Art. 34). To date, there is only one region, that of Gran Chaco in the department of Tarija, which gained independence through a referendum in 2009.

MUNICIPAL LEVEL: All existing municipalities in the country and those to be created according to law have the status of municipal autonomous governments without the need to comply with requirements or prior procedure (Law 031 Art. 33). The Organic Municipal Charter is the norm through which the exercise of municipal self-government authority is regulated, although its elaboration is optional. Autonomous municipal governments are composed of a municipal council and an executive body, which is presided over by the mayor elected by universal suffrage (CPE Art. 283 and Law 031 Art. 34). Municipal councillors are elected every five years in a separate ballot from the mayor. The number of councillors varies between 5 and 11 depending on the size of the municipality. In addition, some seats are allocated through a proportional representation list system. The autonomous municipal governments are classified into 4 groups according to the size of their population: A municipalities, with a population of less than 5 000 inhabitants; B municipalities, with a population between 5 001 and 15 000 inhabitants; C municipalities, with a population between 15 001 and 50 000 inhabitants; and D municipalities, which correspond to municipalities with more than 50 001 inhabitants. Based on the 2012 census, the four municipalities with the largest populations are the cities of Santa Cruz de la Sierra (1.5 million inhabitants), El Alto (0.9 million), Nuestra Señora de La Paz (0.8 million) and Cochabamba (0.6 million).

Finally, the Bolivian Constitution recognises rural native indigenous communities as self-governments that can exercise self-determination in accordance with their rules and procedures and in keeping with the Constitution (CPE Art. 290).

HORIZONTAL COOPERATION: Two or more neighbouring municipalities may merge or assume joint responsibilities by committing the necessary resources. Municipalities with less than 5 000 inhabitants must form associations to access tax co-participation resources. In metropolitan areas, the association of two or more municipalities is considered as a planning instrument. The law also considers municipal districts, defined as integrated administrative units at the territorial level, dependent on the municipal government, within which sustainable human development plans must be elaborated (Law 2028 of Municipalities,1999 updated 2011, Art. 155-168).

The Constitution establishes four types of responsibilities: sovereign, exclusive, concurrent and shared (CPE Art. 297). Sovereign responsibilities, i.e., those whose legislation, regulation and execution are neither transferred nor delegated, are reserved for central government. Exclusive responsibilities determined by a single level of government can be transferred to other levels of government (e.g., waste management can be transferred to municipal level). Concurrent responsibilities lie with central and other levels of government simultaneously (e.g., community road construction). Shared competencies are those whose basic legislation corresponds to the Plurinational Legislative Assembly and whose complementary legislation corresponds to subnational governments (e.g., the creation or modification of subnational government taxes). Autonomous municipal governments are also assigned powers that go beyond the provision of basic services such as education and health services, although the formal transfer of responsibilities has not yet taken place. As for the regional autonomous governments, once constituted, they are granted the powers that are transferred or delegated to them (CPE Art. 301) without previous specification, these being related to the objective of their creation.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Municipal level
1. General public services (administration)	Draw up its statute, collect and provide departmental statistics, grant legal status to social organisations that carry out activities in the department, create and administer taxes, draw up land management and land-use plans.	Draft the Organic Municipal Charter, collect and provide municipal statistics, creation and administration of taxes and fees, expropriation of real estate in its jurisdiction for reasons of municipal public interest, administration of trust funds, investment funds and resource transfer mechanisms; association agreements with other municipalities; planning municipal development.
2. Public order and safety	Departmental civil security plans, programmes and projects. Provide support to police forces and prisons. Citizen security. Establishment of citizen conciliation bodies. Protection of drainage basins.	Civil security plans, programmes and projects. Provide support to police forces and prisons (responsibility shared with departmental level). Establish and regulate the Municipal police. Policies that guarantee the defence of consumers and users at municipal level.
3. Economic affairs / transports	Promotion and administration of hydraulic, energy, irrigation, power generation and transport projects in off-grid systems. Administration of river ports. Planning, design, construction, maintenance and administration of roads. Construction and maintenance of railway lines. Interprovincial land, rail and river transport. Construction, maintenance and administration of public airports. Agricultural health and safety services. Departmental public enterprises. Participation in companies for the industrialisation, distribution and commercialisation of hydrocarbons in the departmental territory. Elaboration and execution of departmental economic and social development plans. Promotion of private investment within the department	Planning, design, construction, conservation and administration of local roads in coordination with rural native indigenous communities. Urban transport, vehicle registration, road planning and education, urban traffic administration and control. Productive infrastructure projects (shared). Municipal public enterprises. Micro-irrigation systems in coordination with indigenous communities. Participation in companies for the industrialisation, distribution and commercialisation of hydrocarbons in the municipal territory in association with national entities in the sector. Local tourism policies.
4. Environment protection	Protection of the environment and wildlife. Environmental pollution control. Conservation of soils and forest resources. Administration of projects for drinking water and solid waste treatment using alternative and renewable sources.	Protection of the environment and natural resources, wildlife and domestic animals. Care of municipal protected areas. Management of projects for alternative and renewable energy sources. Promotion and conservation of the municipal natural heritage.
5. Housing and community amenities	Departmental land use planningUrban and rural electrificationHousing and social housing.	Land use plans and registers. Drinking water distribution. Public lighting. Urban sanitation, solid waste management and treatment Infrastructure and works of public interest. Urban development. Approval of the corresponding fees in their jurisdiction.
6. Health	Management of the health system. Construction of infrastructure and provision of equipment. Provision of medical supplies for hospitals	Construction of infrastructure and provision of medical equipment and supplies for cities. Human and animal food health controls
7. Culture & Recreation	Promotion of sport. Promotion and conservation of the departmental cultural, historical, artistic, monumental, architectural, archaeological, palaeontological, scientific, tangible and intangible patrimony. Monitoring of the artistic and architectural patrimony.	Promotion of sport (shared). Promotion and conservation of the municipal cultural, historical, artistic, monumental, architectural, archaeological, paleontological, scientific, tangible and intangible patrimony. Promotion of culture and artistic activities. Public shows and recreational games. Urban advertising
8. Education	Management of the education system. Construction of school infrastructure. Basic services and supply of educational materials.	Construction of school infrastructure. Basic services and provision of school supplies and food.
9. Social Welfare	Promotion and implementation of projects and policies for children, adolescents, women, the elderly and people with disabilities.	Controlling quality and health in the production, transport and sale of food products. Promotion and implementation of projects and policies for children, adolescents, women, the elderly and people with disabilities.

Scope of fiscal data: Municipalities and departments

Ministry of Economy and Public Finance

Availability of fiscal data: Medium

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: The Constitution recognises the autonomy of subnational governments in the administration of subnational funds and guarantees that such funds will not be centralised in the National Treasury (Art. 340). However, it also stipulates that all responsibilities transferred to subnational governments must necessarily be accompanied by the identification of revenue sources for their financing. Thus, it is established that subnational budgets will be elaborated by each subnational government (Art. 321 and 340); but central government is in charge of determining the formulation of the budget and establishes the maximum spending limit for subnational governments (Law 031).

Subnational financing in Bolivia is regulated by the Constitution and Law 154 on the Classification and Definition of Taxes and Regulation for the Creation and/or Modification of Subnational Government Taxes. Subnational governments have the power to approve, modify or repeal taxes in their jurisdiction (Art. 299 and Art. 323).

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	683	8.3%	22.5%	100.0%
Inc. current expenditure	360	4.4%	14.1%	52.7%
Compensation of employees	139	1.7%	11.6%	20.3%
Intermediate consumption	24	0.3%	7.5%	3.5%
Social expenditure	-	-	-	-
Subsidies and current transfers	41	0.5%	4.7%	5.9%
Financial charges	10	0.1%	12.0%	1.4%
Others	148	0.1%	-	21.6%
Incl. capital expenditure	324	3.9%	66.5%	47.3%
Capital transfers	15	0.2%	-	2.2%
Direct investment (or GFCF)	308	3.7%	64.5%	45.1%

EXPENDITURE: In 2020, total subnational government expenditure amounted to 22.5% of total public expenditure, representing 8.3% of GDP. Capital expenditures had the highest incidence, accounting for 66.5% of total capital expenditure of the general government -23.4% at departmental level and 43.1% at municipal level. However, this expenditure in most cases corresponds to projects financed by transfers from the National Treasury (TGN or Tesoro General de la Nación), i.e., resources from central government or loans from international organisations under central government supervision.

In 2020, both current and capital expenditure decreased due to the COVID-19 pandemic. However, the decrease in capital expenditure was much larger, changing the structure of expenditure. In 2020, capital expenditure accounted for 47.3% of total subnational government expenditure, compared to more than 50% in previous periods (almost 70% in 2016).

In 2020 staff costs accounted for about 40% of subnational governments' current expenditure and just over 20% of their total expenditure.

DIRECT INVESTMENT: With 45.1% of total expenditure, direct investment represented the largest expenditure item of subnational governments in 2020. However, in the context of the COVID-19 crisis, it was also the expenditure that recorded the largest decrease. Thus, departmental investment decreased by 41.4% compared to the previous year and that of municipalities by 47.0%. Departments only executed 76.9% of the budgeted amount, and municipalities 77.2%. The economic areas where the main delays in execution occurred were public investment in transport, urban planning and housing. The paving and tarmacking of roads, paving of streets, and construction of bus terminals and housing, were postponed and are partially scheduled for 2022.

Subnational government expenditure by functional classification
2020 – GG non-consolidated	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure by economic function	803	9.7%	-	100.0%
1. General public services	157	1.9%	36.8%	19.6%
2. Defence	-	-	-	-
3. Security and public order	11	0.1%	36.3%	1.4%
4. Economic affairs/transports	175	2.1%	64.2%	21.8%
5. Environmental protection	21	0.3%	78.7%	2.6%
6. Housing and community amenities	29	0.4%	78.3%	3.6%
7. Health	286	3.5%	71.6%	35.6%
8. Recreation, culture and religion	15	0.2%	11.9%	1.9%
9. Education	49	0.6%	41.2%	6.1%
10. Social protection	61	0.7%	94.5%	7.5%

In 2020, subnational government expenditure by functional classification was concentrated in health and economic affairs, accounting for 35.6% and 21.8% of total subnational expenditure respectively. Expenditure on health is the area that showed the largest increase in response to the pandemic. Consolidation problems do not allow the establishment of reliable percentages of subnational spending in relation to total public spending by functional classification. However, it is worth noting that within total public expenditure, expenditure on environmental protection, housing and community services, health and social protection remained the main focus for subnational government spending.

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	671	8.1%	34.3%	100.0%
Tax revenue	386	4.7%	36.1%	57.6%
Grants and subsidies	122	1.5%	-	18.2%
Tariffs and fees	45	0.5%	-	6.7%
Income from assets	79	1.0%	-	11.7%
Other revenues	39	0.5%	-	5.9%

OVERALL DESCRIPTION: Subnational governments in Bolivia finance their expenditure mainly through taxes collected at national level that are transferred directly to municipalities and departments, and royalties (obligatory economic compensation in favour of producing departments for the exploitation of their non-renewable natural resources). The main taxes transferred to sub-national governments include the hydrocarbon tax and co-participation taxes such as the value added tax, transfer tax and corporate income tax. Municipalities also collect their own tax revenues, which, in most cases, barely represent 20% of their income.

TAX REVENUE: In 2020, tax revenues represented 4.7% of GDP and 57.6% of the total revenues of subnational governments. Of this percentage, more than 80% corresponded to transfers made by central government, the most important being the value added tax (representing 24.1% of the total tax revenues of subnational governments.) The main tax revenue of subnational governments is the property tax, which represents 19% of total subnational revenue, meaning that each inhabitant contributes an average of USD 74 PPP per year. The municipality that collected the most revenues in 2020 was La Paz (seat of the government), followed by Santa Cruz (the most populated municipality). The municipal government of La Paz gave a 10% discount as an incentive for prompt payment of municipal taxes in 2019 and between 18% to 28% for 2020.

GRANTS AND SUBSIDIES: Grants and subsidies represent 18.2% of total subnational government revenues. These revenues are capital transfers from the National Fund for Productive and Social Investment (FPS or Fondo Nacional de Inversión Productiva y Social), the National Fund for Regional Development (FNDR or Fondo Nacional de Desarrollo Regional) and transfers from the Vice-Ministry of Public Investment and External Financing (VIPFE or Viceministerio de Inversión Pública y Financiamiento Externo), which may consist of revenues from central government or loans and grants from international organisations and countries. In 2020, the department of Cochabamba was the department that received the largest amount of revenue from capital transfers.

OTHER REVENUE: Other revenues include operating revenues from the sale of goods and services managed by subnational governments, financial revenues and other non-tax revenues. These other revenues represent about 25% of the total revenue of subnational governments.

Subnational government fiscal rules and debt
2020	Dollars PPP / inh.	% GDP	% general government debt	% SNG debt	% SNG financial debt
Total outstanding debt	259	3.1%	5.4%	100.0%	-
Financial debt	259	3.1%	7.7%	100.0%	100.0%
Currency and deposits	99	-	-	38.4%	38.4%
Bonds / debt securities	4	-	-	1.6%	1.6%
Loans	156	-	-	60.0%	60.0%
Insurance pensions	-	-	-	-	-
Other accounts payable	-	-	-	-	-

FISCAL RULES: Subnational government budgets are governed by the General Development Plan, which includes the development plans of municipal and departmental governments and the general government budget. Subnational governments must guarantee the financial sustainability of the exercise of their powers in the medium and long term and must keep all their financial resources in fiscal current accounts. Local and regional governments must approve their budgets in accordance with the principle of balanced budget rules and are subject to the overall tax ceilings established in accordance with the tax framework determined by the Ministry of Public Finance (Law 031 Art 114).

DEBT: In 2020, the total outstanding debt of subnational governments represented 3.1% of GDP and 5.4% of total public debt.

Law 2042 on Budget Administration establishes the general rules that govern the budget administration process for each fiscal year (Law 2042 Art 1). Article 35 of this law establishes that autonomous public entities must be subject to the following debt limits: (i) the amount committed annually to debt servicing, or DS, (amortisation of capital, interest and commissions) may not exceed 20% of the recurrent current revenues collected in the previous fiscal year; (ii) the present value of the total debt, or PV, may not exceed 200% of the recurrent current revenues collected in the previous fiscal year; and (iii) the law currently prohibits the contracting of non-concessional debt unless expressly authorised by the Ministry of Economy and Public Finance, through the Vice-Ministry of Treasury and Public Credit.

Between 2013 to 2019, the departmental governments maintained their debt levels below the limit; however, in 2020 the Department of Chuquisaca exceeded the PV of 20% of current revenues. In terms of debt servicing, the Department of Pando is at the limit of 20% of current revenues from the previous year. Within the municipalities, in 2020, 5 municipalities exceeded the PV limit, and 7 municipalities exceeded the DS limit.

A large part of the debt corresponds to internal loans from central government and development funds. The only subnational government that issued bonds is the city of La Paz in 2018. The Indigenous Authorities did not issue debt, while the Gran Chaco Regional Government applied to register for public credit operations in 2019 in order to contract debt with the FNDR.

TERRITORIAL MANAGEMENT OF THE CRISIS: The COVID-19 pandemic crisis generated adverse effects at all levels of government worldwide. Bolivia was no exception. The first confirmed case of COVID-19 was on 11 March 2020 and a nationwide policy of strict confinement was declared on 21 March. The rigid quarantine lasted for 5 months until 31 August 2020 when a "dynamic and conditional quarantine" phase was established. In this new phase, departmental and municipal governments were in charge of defining the measures for easing mobility restrictions based on the number of confirmed infections. Although the new measures were determined by the subnational governments, central government proposed a strategy of confinement according to the risk indexes determined by the Ministry of Health.

On 8 April 2020, by Ministerial Resolution 0193, the Ministry of Health established the COVID-19 National Scientific Committee to advise on critical issues, the development of protocols for medical specialties and the generation of standards such as the official Ministry of Health guidelines for the management of coronavirus. The Committee is composed of the presidents of the Scientific Societies that form part of the Bolivian Medical College and other institutions, such as the College of Pharmacists and Biochemists, and representatives of the public and private universities, making a total of almost 40 institutions. Delegates from the different technical directorates of the Ministry of Health, under the chairmanship of the Vice-Minister of Health and Promotion, also form part of this committee.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: The emergency measures to fight the pandemic crisis were set out by central government, which introduced national economic measures such as deferral of credit payments in the financial system, tax payment extensions and social measures to transfer resources to the population without regular income.

At the subnational level, measures focused on allocating resources for medical equipment and medical supplies for hospitals, the purchase of biosecurity suits, face masks, laundry, cleaning and fumigation of streets and markets, among others. Some municipalities also provided food parcels to the most vulnerable families. In addition, subnational governments were in charge of procuring rapid tests and distributing basic medicine kits.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: Since 2014, the subnational governments have been running deficits in their balance sheets due to the decrease in revenues, mainly due to the lower collection of the Direct Tax on Hydrocarbons (IDH or Impuesto Directo a los Hidrocarburos). Although subnational governments still presented fiscal deficits in 2020, the deficit was lower than the average of previous years.

Revenues were lower than in the previous year, mainly due to the economic slowdown and decrease in economic activity. The departments experienced reductions mainly in revenues from assets (royalties) and tax revenues (predominantly hydrocarbon taxes). Furthermore, municipalities showed reductions mainly due to a fall in transfers from the central level due to the reduction in tax collections from the co-participation taxes. In 2020, tax measures were implemented to reduce the impact of the pandemic – including extensions, deferrals, exemptions, releases, reduction of the base rate, exceptional recognition of tax credits and deductions in the corporate income tax. These measures, together with the economic downturn, caused revenues to fall sharply. However, through Law 1307, a higher percentage of the Direct Tax on Hydrocarbons (IDH) was reallocated to municipalities, departments and public universities to face the emergency, and additional resources were transferred through Law 1293 on the Prevention, Containment and Treatment of the Coronavirus Infection (COVID-19).

Additional expenditure by subnational governments in response to COVID-19 went on the purchase of goods and services. The Autonomous Departmental and Municipal Governments spent a total of Bs 806 million (14.8% of total departmental expenditure) and Bs 328 million (2.1% of total municipal expenditure) respectively in 2020 to prevent and control the spread of COVID-19. The main expenditure of subnational governments was on medical and laboratory equipment and the purchase of medical supplies. In general, current expenditure decreased for both departmental and municipal governments, mainly due to lower expenditure on personal services, non-personal services and consumer goods due to the shutdown of activities. Capital expenditure showed the largest decrease as a result of the standstill in public investment projects.

ECONOMIC AND SOCIAL STIMULUS PLANS: Starting in the 2021 fiscal year, policies focused on household spending and public investment were initiated as an economic stimulus package. To encourage household spending as a first reactivation measure, the "Bono contra el Hambre" (Voucher against Hunger) of Bs 1 000 (~USD 380 PPP) was created for people who did not have a fixed income in the previous year, in addition to the partial or total refund of contributions to the Pension Fund Administration (AFP or Administración de Fondos de Pensiones). The refund was total only if the income saved in the AFP account was less than Bs 10 000 (~USD 3 800 PPP), otherwise it was 15% of the amount saved up to a maximum of Bs 15 000 (~USD 5 700 PPP).

In terms of public investment, projects that had been put on hold were continued and new projects were started with the aim of achieving average growth rates of 5.1% over the next five years (Economic and Social Development Plan, 2021-2025).