Bolivia will not be able to support a fixed exchange rate in the context of commodity dependence. Fitch downgraded Bolivia in November to B+, citing the central bank’s declining reserves and political turmoil. It added that Bolivia has sustained its currency by burning international reserves at an unsustainable pace. Since 2014 they have fallen to less than $8 billion, Bolivian dollar bonds due in 2028 have reduced their yield to 4.94%.
The National Chamber of Commerce (CNC) is organising the “International Supply Chain Fair”, with the aim of strengthened Bolivia’s international trade. The event will take place the 6th and 7th of February and will bring together 177 companies between providers and requesters from the US, Colombia, Ecuador, Brazil, Peru, Chile, Argentina and others. The fair will create a platform to promote Bolivia’s products and services, explained Mauricio Ortega, Marketing Manager of the CNC.
Bolivia’s YPFB had to buy 150 million litres of anhydrous alcohol (ethanol) from sugar mills in 2019, but only acquired 47 million or 31%. Although the non-compliance created economic problems, sugar mills are still betting on the project, hoping that the State-owned company will buy the full volume committed for 2020, which will increase by a range of 7 and 33%.
As of December 31, 2019, the portfolio of pension funds (AFP) increased by 11.56% compared to December 2018 as a result of investments in the financial system. AFP Prevision forecast yield rose from 1.59% to 4.87% and AFP Futuro yield increased from 1.73% to 4.71%. The value of the funds in both firms adds $19.1 billion. The number of Individual Capitalization Fund affiliates in 2019 increased by 3.74% to 2.3 million beneficiaries.
Bolivia’s trade deficit reached $700 million as of September 2019, reported the National Chamber of Industries (CNI). Based on data of the National Institute of Statistics (INE), the CNI said that Bolivia’s trade with the world has been negative the last five years: $920 million in 2015, $1.3 billion in 2016, $949 million in 2017, $935 million in 2018 and $700 million by September last year.
The Bulo Bulo Ammonia and Urea Plant registered a $34.4 million loss between 2018 and 2019. The former Hydrocarbons Superintendent, Hugo de la Fuente, said that the building of the plant cost in $110million more than its original budget and was paralysed 50% of the working days.
The State and its executing units at the national, departmental and municipal levels owe the construction sector more than $143.7 million. The financial, labour and tax costs generated by unpaid spreadsheets are absorbed by construction companies, leaving them, in many cases, at risk of bankruptcy, resulting in the loss of employment sources. In the period 2018-2019, the construction sector reduced from 650 thousand to 350 thousand jobs.
Bolivia will be able to export electricity only three months a year to Argentina, in winter times, and it will have to compete with suppliers from Brazil, Uruguay and Chile, said the Strategic Development Manager of the National Electricity Company (ENDE), Jose Padilla Rojas. The project to export Electricity to the north of Argentina has received an an investment of $25 million and will exceed $33 million when the construction of the transmission line is finished.
The level of Bolivia’s Net International Reserves (RIN) continues to decline and reaches six months of imports. Data from the International Monetary Fund (IMF) and the World Bank in 2018 reveal the following for the region: Brazil is the country with the most RIN, with reserves enough for 13.6 months of imports. Follow Peru (11.1), Uruguay (10.3), Bolivia (7.8), Colombia (7.1), Argentina (7.1), Paraguay (6), Chile (4.5), Ecuador (0.9) and Venezuela, which has no information available. Bolivia’s RIN continued to fall last year to $ 6,468 million (about six months of imports), according to a report by the Central Bank of Bolivia (BCB).
Banks increased interest rates for Fixed Term Deposits (DPFs) to 5.8% and savings banks up to 5%. This service is in effect for a limited time to access these benefits. Attractive rates respond to the economic growth of recent years in Bolivia, which means that more people opt for DPFs as natural and legal people manage more significant amounts of cash resources.