Bolivia’s external debt dropped to 23.5% of the Gross Domestic Product (GDP) by April this year, announced the Economy Ministry. By the end of 2018, Bolivia’s external debt represented 25.1% of its GDP. The total amount of the debt grew from $4.9 billion in 2005 to $10.3 billion by the end of April 2019. In the same period, Bolivia’s GDB grew from $9.6 billion to $40.6 billion.
Standard & Poor’s projected Bolivia’s economic growth by 4% for the period 2019-2022. The rating agency also kept Bolivia’s qualification in BB- with a stable outlook in a complex international economic environment where countries like Costa Rica, Nicaragua and Argentina have seen their risk rate decreasing in the last six months. S&P economic projections for Bolivia coincide with those of other international organisations such as the IMF (4%), ECLAC (4.3%) and the World Bank (4%).
The investment the Bolivian Central Bank (BCB) made with the international reserves abroad were more profitable than the return obtained for lending money to state companies in Bolivia, said the international financial affairs expert, Jaime Dunn. He added that in 2018, BCB’s investment in different portfolios abroad had a return of $149 million or 2.13%, while the loans to state companies had a return of 0.62%.
The Central Bank of Bolivia (BCB) reported that 20% of the Net International Reserves (RIN) are in gold and 53% in US dollars. According to the institution, the reserves have been invested mostly in Europe (50%), followed by the United States, South Korea and China. “The stock of gold reserves reaches 42.9 tonnes, which represents 20% of international reserves and are invested in high-quality financial institutions,” said BCB’s senior economic policy advisor, Raúl Mendoza.
Bolivia’s international reserves recovered in the last week to reach $8.4 billion, according to the Economy Ministry. At the beginning of April, the international reserves were $7.9 billion. The Economy Ministry explained that behave of the international reserves depend on different variables such as trade balance or the net capital flow. The government expects a $1.2 billion reduction of the international reserves for 2019 due to the “heavy investments” that will take place in the country.
The Financial System Authority (ASFI) said that the credit portfolio of the financial system in Bolivia registered a healthy growth and that financial arrears represent 2% of credits, the lowest level in the region. According to ASFI, Colombia has the highest level of financial arrears with 4.4% followed by Ecuador with 3.5%, Peru (3.4%), Argentina and Brazil both with 3.1%, Paraguay (2.5%), Uruguay (2.4%), Chile and Bolivia both with 2%.
Bolivia’s external debt is within reasonable margins, said the Interamerican Development Bank (IADB), one of the country’s main creditors. The IDB finances public investment projects, mainly in the areas of infrastructure and job creation. More than 70% of the financing portfolio goes to infrastructure projects: roads, electric sector, hospitals, water supply and sanitation.
Between December 2018 and April 2019, Bolivia’s net international reserves (NIR) had a reduction of SU$1.02 billion, according to data from the BCB. If the trend continues without changes the NIR will fall to SU$5 billion.
Bolivia’s international reserves decreased by US$821 million in the first quarter of 2019. The reserves fell from SU$8.9 billion in December 2018 to SU$8.1 billion by 22 March. The Government insisted that the money is being used in productive projects but some analysts warned that this accelerating level of decrease could impact the country’s payment capacity.
Remittances from Argentina fell by 29% due to the crisis in this country. Inflation and measures from the Argentinian government to prevent the outflow of foreign currency are among the reasons for the decline. According to the Bolivian Central Bank (BCB) remittances from the rest of the world also fell 1.6%.