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Economy & Business - May 2024
BOLIVIA: Running out of gas
The international credit ratings agency Moody’s announced on 27 April that it had once again lowered Bolivia’s credit rating, this time from Caa1 to Caa3, although it did upgrade the country’s outlook from negative to stable. The downgrade reflects a belief that investment in Bolivia is high risk due to ongoing governance challenges and internal political conflict. Both of these are exacerbated by ongoing dollar shortages, which have seen the country’s foreign reserves plummet and heightened the risk of a balance of payments crisis. Moody’s also highlighted the risk of Bolivia defaulting on its external debt payments. Although the immediate liquidity problem was addressed by 2023 legislation allowing the government to sell some of its gold reserves, this is not a long-term solution, and the government is approaching the legal limit of gold reserves it is allowed to sell.
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