Natural gas, gold and zinc accounted for 66% of Bolivia’s exports in 2019; between the three added sales worth $5.8 billion of the total traded, according to the Bolivian Institute of Foreign Trade (IBCE), based on data from the National Statistical Institute (INE). This year, the country expects to improve domestic foreign trade with the export liberation of agricultural products and their by-products.
The State General Budget (PGE) 2020 projects a public investment of $5.2 billion; of this amount 38.8% will go to productive projects, 30.9% for infrastructure and 26.6% for the social sector, thus prioritizing public investment with economic impact.
The Program projects a growth rate of 3.5% and inflation of 3.4%. Its objectives are to maintain macroeconomic stability, to boost the domestic market, to encourage investment and to support the development of productive activities. The programme envisages a downward trajectory of the deficit until 2022, maintaining an appropriate balance between fiscal sustainability, economic growth and the preservation of social protection mechanisms.
Bolivia closed past management with annualized inflation of 1.47%, the lowest rate of the last decade, underpinned by a negative record in December of 1.54% compared to November. The Consumer Price Index (CPI) recorded a negative change of 0.03% in January compared to December 2019. Prices fell, mainly from the food and non-alcoholic beverages division, closed 2019 with annual inflation of 1.47%
The following projects are currently implementing: Forest Preservation Program, $10.9 million donations. Okinawa Colony Road Improvement, $38.6 million – donation; Preventive Disaster Measures in the Fundamental Road Network, $15.8 million – grant; Construction Laguna Colorada Geothermal Plant: $637.4 million – loan. Delivery of medical equipment for third-tier hospitals: $4.54 million – donation; Japanese private investment in Bolivia: Minera San Cristobal, by Sumitomo Corporation $1.8 billion. Bolivia is the largest exporter of zinc and the second-largest exporter of lead for Japan.
The Economic Commission for Latin America and the Caribbean (ECLAC) and the World Bank (WB) estimate that Bolivia’s economic growth in 2020 will be 3%, while the International Monetary Fund (IMF) projects to be 3.8%. The stability of the dollar exchange rate is guaranteed, as Net International Reserves (RIN) reached $6,468 million in 2019, representing 16% of the value of Gross Domestic Product (GDP).
The Central Bank of Bolivia (BCB) said that as 31 December 2019, the international reserves reached $6.5 billion (16% of the GDP), which is enough to keep the dollar exchange fixed at Bs.6.96. The BCB also said as 6 of January, the level of deposits reached Bs.180.5 billion ($26.1 billion).
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%.
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.