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LatinNews Daily - 27 January 2025

In brief: Fitch downgrades Bolivia

*The international credit ratings agency Fitch Ratings has downgraded Bolivia’s long-term foreign-currency issuer default rating to ‘CCC-’ from ‘CCC’. Fitch stated that “although a default event does not yet appear probable, the margin of safety continues to erode as a result of dwindling foreign exchange (FX) availability and the absence of corrective economic and fiscal policy measures.” It noted that international reserves stood at US$1.98bn in December 2024, of which just US$47m consisted of hard currency reserves, with US$1.89bn in gold (currently at the 22-tonne legal minimum) and US$6.4m in special drawing rights from the International Monetary Fund (IMF). Fitch also highlighted persistent balance of payment pressures, with exports down by 19% in the first 11 months of 2024, year-on-year, due to a drop in natural gas production, while it expects the current account deficit to widen to 3.5% of GDP in 2024, up from 2.7% in 2023. Among other concerns, Fitch also highlighted mounting political tensions ahead of general elections in August this year, which have resulted in economic disruption due to regular protests and roadblocks by supporters of former president Evo Morales (2006-2019), who is currently barred from competing. Fitch also noted rising inflation, which reached an annual rate of 10% in December, and highlighted “uncertainty” about Bolivia’s ability to make a US$333m bond repayment in March 2026. Fitch did not assign Bolivia an outlook, noting that it does not typically do so for countries with a rating of ‘CCC+’ or below.

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