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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

March 6, 2024

Can Arce’s New Policies Energize Bolivia’s Economy?

Bolivian President Luis Arce’s government last month announced new policies designed to spur the country’s economy. // File Photo: Bolivian Government.

Q

  • Bolivia’s government on Feb. 20 outlined a series of economic measures to spur investment and raise exports. The government said it would seek to reduce bureaucracy for exports, boost investment in grains production and also allow for larger trucks on the road, among other measures. What are the main challenges facing Bolivia’s economy, and to what degree would the new initiatives strengthen it? How much of the government’s plans can be accomplished by executive action, and what parts of it will require legislative approval? What parts of Bolivia’s economy are the strongest, and which are struggling the most?

A

Carolina Caballero, associate director for sovereign and international public finance at S&P Global Ratings: “We downgraded Bolivia’s rating to CCC+ in November, reflecting our view that a more fragile external profile weakened Bolivia’s capacity to meet its debt service commitments. The hydrocarbon trade balance turned negative in 2021 and has consistently increased since then. The measures announced to reduce export restrictions could help to reduce the external imbalance over the medium term, if executed. Initiatives to promote private investment in gas, biofuels and lithium aim to reverse the trend. However, investors’ confidence remains weak, partly explained by a track record of energy price controls. Moreover, any projects would likely have an impact over…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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