Perspectives on Remittance Flows in 2025

LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

May 8, 2023

What Factors Are Weighing on Bolivia’s Economy?

Bolivia’s government is in advanced talks with the CAF–Development Bank of Latin America, led by Executive Director Sergio Díaz-Granados, on a $400 million contingency line. // File Photo: CAF-Development Bank of Latin America..

Q

A

Carolina Caballero, associate director for sovereign and international public finance at S&P Global Ratings: “Bolivia’s fiscal and external profile have steadily deteriorated over the last five years alongside stagnation of its gas sector, and the limited exchange rate flexibility. Expansionary fiscal policies to counterbalance weaker terms of trade after the 2015 decline in energy prices have pushed general government deficits above 5 percent of GDP over the last six years. The real appreciation of the boliviano combined with high domestic demand and declining gas export capacity translated into persistent current account deficits. These deficits were financed only partially with foreign direct investment. The combined rise in foreign debt and use of international reserves has exhausted Bolivia’s once large external buffers. Amid inconsistent government signals to reverse this trend and…”

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