Restrictions on movement on the Covid-19 have caused flights to be reduced by 70%, and as a result, the Bolivian Airport Services Corporation (Sabsa) has stopped receiving Bs 1.4 million ($201,149) in just 19 days. The institution expects the situation to worsen and its income to fall by more than 50%.
Chile’s Terminal Puerto de Arica (TPA), through which 1.6 million tons of imported goods from overseas arrived in Bolivia in 2019, activated as of this week the sanitary protocols to prevent the spread of Covid-19, with the installation of several control barriers. It will not affect the movement of cargo.
CAF, the Latin American development bank, has made available to its member countries a “fast-disbursing emergency credit line” of up to US$2.5 billion to take action against the coronavirus pandemic. It consists of a contingent credit line of up to $50 million per country, for direct public health care. Authorities also have non-reimbursable technical cooperation resources of up to $400,000 per country for initiatives related to coronavirus pandemic emergencies.
Small gastronomic establishments reduced 50% of their staff, income fell to 10%, and the average number of establishments closed was 221 in a month. The business sector supports the measures established by the Government but also demands that all of the economic activities, especially small businesses, receive the necessary support to face the coming financial crisis.
Oil prices continue to fall and today the WTI barrel, the benchmark for Bolivia, reached its lowest rate in 17 years at $22.67. Bolivia calculated the General State Budget (GSB) for 2020 with a reference price of $59.87 a barrel of oil. So far, there is a decrease of $37.2 (62%), which will mean a drop in the country’s income from gas exports to Argentina and Brazil.
The significant drop in international oil prices that will affect the value of Bolivia’s natural gas exports is expected to fall by some $850.5 million, 2% of GDP, by 2020. In the case of oil imports, the State expects savings of $271.7 million, 0.7% of GDP. The net impact would be a decrease of 1.3% of the GDP, in value of $578.8 million. The president of YPFB asked sub-national governments to re-evaluate their projects.
80% of the 3,500 companies in Cochabamba have economic problems due to the measures taken to stop the advance of Covid-19. The Federation of Tourist Activities and Entertainment Cochabamba (FATEC), which brings together discos, bars, liquor stores, nightclubs and musicians, reported that more than 13,000 members have no way to generate economic resources and are asking for support.
The Government will allocate just over 776 million ($111.5) bolivianos for the so-called Bono Familia which will reach more than 1.5 million primary school students in the fiscal and agreement sector. Each low-income family will receive 500 bolivianos ($71.83) for each child in a public school to minimize the impact of the coronavirus health crisis.
Bolivia closed 2019 with negative Foreign Direct Investment (FDI) of $160 million, a scenario that has not occurred for 14 years (2005). Bolivia pointed a higher outflow of capital, due to the withdrawal of money in payment of dividends, according to the report of the Bolivian Institute of Foreign Trade (IBCE) with figures from the Central Bank of Bolivia. Economists suggest that legal security and labour flexibility improve the situation.
In New York, the WTI (Texas) barrel for delivery in April ended at $20.37, a drop of 24.4%. The North Sea Brent for delivery in May fell 9.9% to $25.86 a barrel. Given this scenario, Bolivia is affected by the perception of income, which is distributed to the governments, municipalities, universities, the National Treasury and various national funds, since the sale price of Bolivian gas is indexed to the cost of WTI barrel. The effect will have greater visibility in the third quarter of the 2020 administration.