es, reformed its economy after suffering a
disastrous economic crisis in the early 1980s. The reforms spurred
real GDP growth, which averaged 4% in the 1990s, and poverty rates
fell. Economic growth, however, lagged again beginning in 1999
because of a global slowdown and homegrown factors such as political
turmoil, civil unrest, and soaring fiscal deficits, all of which
hurt investor confidence. In 2003, violent protests against the
pro-foreign investment economic policies of President SANCHEZ DE
LOZADA led to his resignation and the cancellation of plans to
export Bolivia's newly discovered natural gas reserves to large
northern hemisphere markets. In 2005, the government passed a
controversial natural gas law that imposes on the oil and gas firms
significantly higher taxes as well as new contracts that give the
state control of their operations. Bolivian officials are in the
process of implementing the law; meanwhile, foreign investors have
stopped investing and have taken the first legal steps to secure
their investments. Real GDP growth in 2003-06 - helped by increased
demand for natural gas in neighboring Brazil - was positive, but
still below the levels seen during the 1990s. Bolivia's fiscal
position has improved in recent years, but the country remains
dependent on foreign aid from multilateral lenders and foreign
governments to meet budget shortfalls. In 2005, the G8 announced a
$2 billion debt-forgiveness plan over the next few decades that
should help reduce some fiscal pressures on the government in the
near term.

Bosnia and Herzegovina
Bosnia and Herzegovina ranked next to
Macedonia as the poorest republic in the old Yugoslav federation.
Although agriculture is almost all in private hands, farms are small
and inefficient, and the republic traditionally is a net importer of
food. Industry remains greatly overstaffed, a holdover from the
socialist economic structure of Yugoslavia. TITO had pushed the
development of military industries in the republic with the result
that Bosnia was saddled with a host of industrial firms with little
commercial potential. The interethnic warfare in Bosnia caused
production to plummet by 80% from 1992 to 1995 and unemployment to
soar. With an uneasy peace in place, output recovered in 1996-99 at
high percentage rates from a low base; but output growth slowed in
2000-02. Part of the lag in output was m