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Economy & Business - February 2025

BOLIVIA: Another Fitch downgrade as problems mount

The international credit ratings agency Fitch announced on 24 January that it has downgraded Bolivia’s long-term foreign currency issuer default rating to ‘CCC-’ from ‘CCC’. The justification given by the agency is that although a default does not appear likely in the short term, the margin of safety has continued to decrease, due to dwindling foreign exchange reserves and the lack of clear economic and fiscal policy measures to reverse this situation. As of late January Bolivia’s central bank (BCB) held its legal minimum of just 22 tonnes (approximately US$1.89bn) of gold, and less than US$50m in hard currency. The BCB acquired 14.5 tonnes of gold locally in 2024 (with a value of approximately US$1.2bn), which it has refined abroad and liquidated in order to help the country meet its external debt obligations and pay for imports. There have also been other ad hoc efforts to generate revenue, such as a central bank programme to issue bonds in US dollars, although this has had limited uptake.

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