Bolivia and an IMF Extended Fund Facility: Financial Sustainability, Verifiable Social Sustainability, and Net Financing Additionality

Abstract

This paper evaluates stabilization scenarios for Bolivia under external-financing stress by jointly modeling financial sustainability, verifiable social sustainability and the net additionality of multilateral financing. The main correction is that financing already received, contracted or expected from multilateral institutions cannot be counted as a marginal benefit of a hypothetical IMF Extended Fund Facility. Already secured resources are moved to the baseline; only incremental, liquid, timely and non-displaced financing is rewarded. The analysis combines corrected scenario scoring, poverty and inequality measures, maternal-child mortality indicators, public investment multipliers, self-defeating consolidation diagnostics, Monte Carlo uncertainty, leave-one-criterion-out tests and adverse execution assumptions. The results do not support an orthodox IMF-first strategy or front-loaded fiscal consolidation. The strongest designs are concessional multilateral packages with verified net additionality, productive execution, social-health floors and protection against poverty and maternal-child deterioration. An IMF arrangement is valuable only if it adds resources or credibility that were not already secured. The conclusion is that sustainability must be evaluated as a joint financial and social condition: closing cash gaps by weakening growth, poverty, inequality or maternal-child outcomes can be macroeconomically self-defeating.