Assessing the impact of PRSPs on Child Poverty: The Case of Bolivia

HIPC II funds are generated from taxes, customs, duties, and donors’ funds. These resources are
deposited into a special account in <strong>the</strong> Central Bank <strong>of</strong> Bolivia. The Treasury <strong>the</strong>n allocates
US$27 Million <strong>of</strong> <strong>the</strong>se funds to <strong>the</strong> Municipal Solidarity Fund for Scholarly Education and
Public Health (Fondo Solidario Municipal para la Educacion Escolar y Salud Publica). Two
third <strong>of</strong> this fund are allocated by <strong>the</strong> Ministry <strong>of</strong> Education to hire more teachers and increase
<strong>the</strong> number <strong>of</strong> teaching hours <strong>of</strong> current teachers. The remaining one third is given to <strong>the</strong>
Ministry <strong>of</strong> Health to hire more health care personnel (Honorable Congreso Nacional, 2001; 3).
The remaining funds are deposited into <strong>the</strong> Special Dialogue Account 2000 (Cuenta Especial
Dialogo – CED) in <strong>the</strong> Central Bank <strong>of</strong> Bolivia, where <strong>the</strong>y are divided and deposited directly
into <strong>the</strong> municipal accounts (Bolivia, 2001: 142-143; Congreso Nacional, 2001; 4-5). The funds
are divided as follows:
• 20% for <strong>the</strong> improvement <strong>of</strong> education, allocated based on <strong>the</strong> school age population in each
municipality. Municipal funds allocated to education can be to purchase materials, school
equipment, maintenance <strong>of</strong> school infrastructure, and provide incentives to avoid students
dropping-out (ibid).
• 10% for <strong>the</strong> improvement <strong>of</strong> health, distributed based on <strong>the</strong> population <strong>of</strong> <strong>the</strong> municipality.
Health funds can be used to purchase equipment, o<strong>the</strong>r inputs, human resources training, and
Public Health sector infrastructure maintenance (ibid)
• 70% for social and productive infrastructure. Of this fund, 30% is distributed to each <strong>of</strong> nine
departments, and <strong>the</strong>n redistributed to <strong>the</strong> constituent municipalities using a povertyweighting
formula. The remaining 70% is disbursed directly to <strong>the</strong> municipalities using a
formula whereby municipalities with higher poverty rates receive more resources. The
municipalities can use this money for productive infrastructure, land tenure and distribution,
micro-enterprise technical assistance, co-financing animal and vegetal sanitation projects,
health, education and sanitation infrastructure, public infrastructure for tourism, alternative
education programs, food programs in schools and child assistance programs, anti-plague
programs, municipal security programs, environmental protection programs and natural
disaster-assistance(ibid)
The PRSP and <strong>the</strong> National Dialogue Law do not define <strong>the</strong> limits <strong>of</strong> each <strong>of</strong> <strong>the</strong> population
categories. However, in a recent interview, Romero Cabrero (2005), co-author <strong>of</strong> <strong>the</strong> National
Dialogue Law, indicated that <strong>the</strong> categories are based on <strong>the</strong> limits defined in <strong>the</strong> Human
Development Index and <strong>the</strong> scores that each municipality receives in each category are based on
<strong>the</strong> most recent National Census. The higher <strong>the</strong> score, <strong>the</strong> worse <strong>the</strong> poverty rate in <strong>the</strong>
municipality. Funds for social and productive infrastructure target where <strong>the</strong> need is deemed
greatest; while municipalities who have relatively better poverty indicators are negatively
weighted and receive less funds (Congreso Nacional, 2001, 4-5; Bolivia, 2001;143).
National Compensation Policy
The main objective <strong>of</strong> <strong>the</strong> National Compensation Policy (Política Nacional de Compensación-
PNC) is to create an effective channel for municipalities to receive additional resources
transferred by international donors to neediest municipalities. The PNC created <strong>the</strong> Single
Funding Directorate (Dirección Única de Fondos-DUF) to channel donor funds. Donor funds
were previously allocated at <strong>the</strong> will <strong>of</strong> <strong>the</strong> donor, which could be influenced by political gain.
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