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$8.1 billion by 22 March. The Government insisted that the money is being used in productive projects but some analysts warned that this accelerating level of decrease could impact the country’s payment capacity.
Remittances from Argentina fell by 29% due to the crisis in this country. Inflation and measures from the Argentinian government to prevent the outflow of foreign currency are among the reasons for the decline. According to the Bolivian Central Bank (BCB) remittances from the rest of the world also fell 1.6%.
The use of digital technology in the banking sector exceeded 50% of the total financial transactions in 2018, said the executive secretary of the Association of Private Banks of Bolivia (Asoban), Nelson Villalobos.
The Bolivian external debt reaches US$ 10,187 million. The Ministry of Economy explained that the debt represents 23.3% of the Gross Domestic Product (GDP), below the limits set by international organizations, such as the Andean Community (CAN). The largest creditor is IADB with 28.7%, followed by CAF with 23.8%, and investors in Sovereign Bonds with 19.6%. China is in fourth place with a share of 8, 9%, followed by the World Bank with 8.5%.
Moody’s kept Bolivia’s grade on Ba3. The rating agency highlighted the growth and International Reserves of Bolivia, which mitigate risks. William Foster, of the Investors Service of the Rating Agency, explained that one of the challenges for the country is to overcome its high dependence on hydrocarbon exports. Moody’s added that a weak institutional framework is another hurdle. External vulnerability risk is moderate, with International Reserves at about US$ 6.9 billion, representing 21% of GDP and external debt payments of only 20% to 30% of reserves.
The Government asked Bolivian banks to repatriate capital from abroad to sort out an apparent minor liquidity problem in the financial sector. According to the Economy Minister, Luis Arce, Bolivian banks have a lot of dollars on foreign accounts, but they are not bringing back this capital. He added that the Government already asked them to repatriate this money.
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15% of the second year-end bonus have to be used to buy national products, established the supreme decree that regulates the payment of the benefit. According to the decree, a mobile wallet system will be established to allow the workers to buy national products, but the will have to provide their mobile numbers. The system will be optional for the private sector but the companies will need to negotiate an optional system with their workers.
Bolivia does not need to worry about its financial liquidity. By October 2018 credits in the financial sector reached $US22.2 billion, which means 12% annual growth, said the Banks Association of Bolivia (Asoban). Deposits grew at a slower rate of 6%, to reach $US24.9 billion. Asoban recognised that there is less liquidity in the system but it expressed its confidence that the situation will be reversed.
The drop in international oil prices from $US70 to $US53 between July and November this year will have a negative impact on the 2019 budget, warned the economic expert German Molina. The budget should be ready by October this year, but the Government has still not sent it for approval.