The Bolivian Poverty Reduction (BPRS) was formulated based on a series of broad participation, and on paper, its "strategic components" cover almost all of the public expenditures. Furthermore, the BPRS is legitimized by national law (National Dialogue Law 2000). Apparently, BPRS seems to serve as an exclusive national development strategy. However, in terms of their linkage with budget allocation/implementation mechanism, BPRS and the National Dialogue Law 2000 bind only pro-poor targeted expenditures at the municipality level. Strong link between BPRS's overall "strategic components" and budget system is yet to be established.

BPRS is built on a number of initiatives taken by the Bolivian Government (GoB) throughout the 1990s.

• The National Action Plan 1997-2002 (Plan Operativo de Accion 1997-2002) was elaborated based on the 1st National Dialogue (participatory consultation). This national development policy addresses four pillars: "opportunity," "Equity," "Institutionality" and "Dignity," of which three pillars (except dignity which relates to coca leaf eradication) are substituted by BPRS.
• A series of laws, such as the Popular Participation Program Law (1994) and the Municipality Law (1999) were enacted in order to enhance the popular participation and decentralization as a principle approach to reduce poverty. This approach is reflected in BPRP.
• The DUF (Single Funding Directorate) was created in 1999 to put the existing social investment funds under a common funding framework and to channel aid money. National Compensation Policy (2000) was established to define policies, priority actions for poverty reduction to be implemented through DUF.
• Bolivia, as the first CDF pilot country, elaborated the "New Framework for Relationship between the Government of Bolivia and International Cooperation" (1999), which determines the principles and guidelines for international cooperation and provides the framework for PRSP process.

Despite time constraints to meet the HIPC process, the GoB elaborated BPRS based on intensive consultations with the civil society (2nd National Dialogue). Soon after the finalization, it was formalized by the National Dialogue Law 2000;

BPRS addresses four strategic components and three cross-cutting issues. Under these components, more than 40 areas, all of which are pro-poor targeted measures, are identified. (Specific priority areas are indicated in parenthesis).

• Opportunities for employment and income for the poor (e.g., rural development through the improvement of rural infrastructure, microenterprises and small business, microfinancing, technological assistance, road infrastructure, land tenure);
• Productive capacities of the poor (e.g., education, health, basic sanitation);
• Security and protection for the poor (comprehensive child care);
• Societal participation and integration; and
• Cross-cutting issues (e.g., indigenous and native peoples, gender equality and natural resources and environmental preservation).

BPRS estimates that public investment related to BPRS represents 97 percent of total public investment. A part of this investment is executed at the municipality level through HIPC Fund and DUF. In particular, building on the ongoing decentralization and popular participation process (started in the 1990s), BPRS has established detailed procedures regarding the implementation of decentralized, pro-poor targeted measures.

• The overall mechanism for prioritizing budget allocation (such as MTEF) is yet to be established. Sector policies are being elaborated to sharpen its prioritization.
• On the other hand, BPRS and the National Dialogue Law 2000 strictly bind the use of financial resources available from HIPC initiative and donor support through two decentralized mechanisms: (i) HIPC Fund (with resources saved from debt relief) and (ii) DUF (with resources from foreign aid and local budget including the transfer from central government and its own resources, etc.). BPRS offers criteria for the distribution of these funds to municipalities under transparent formula so that benefits to the poorer municipalities can be sufficiently assured.

The guidelines indicated in the Bolivia CDF ("New Framework for Relationship between the Government of Bolivia and International Cooperation") are reflected in the BPRS process. Basket fund and unification of procedures are partly introduced through DUF. (All foreign assistance implemented at the municipality level is expected to be allocated to DUF in accordance with the strategic components.) However, overall features are to be determined as the BPRS process makes progress.

It is not clear whether the next government (taking office in August 2002) will completely succeed the present BPRS. However, most of the emerging issues in the BPRS process (e.g., prioritization in budget formulation, selection of poor-based indicators) are likely to be discussed continuously as their needs are universal in Bolivia's poverty reduction.

Republic of Bolivia [2001], Poverty Reduction Strategy Paper (PRSP): Estrategia Boliviana de Reduccion de la pobreza (EBRP), March. [http://poverty.worldbank.org/files/bolivaprsp.pdf].

Republic of Bolivia [2001], "Ley 2235: Ley del Dialogo Nacional 2000."
[http://www.municipio.gov.bo/legal/PS_FOLDER/Ley2235(ley_Dialogo_Nacional).pdf].

*This note was written by GRIPS Development Forum.