The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
This paper derives estimates of optimal levels of reserves for Bolivia, focusing on current account shocks as the key balance of payments risk. Bolivia's foreign reserves are adequate, with an optimal level between 29 percent of GDP and 37 percent of GDP. The accumulation of foreign assets stemmed primarily from a persistent current account surplus, in the context of a crawling peg exchange rate regime. Large current account surpluses followed from major terms of trade improvement after the sharp increase in Bolivia's key export commodity prices during the period 2004-08.