Standard & Poor’s gave Bolivia a B, B+ grade, BUT…

Standard & Poor’s qualified the perspectives for Bolivia as “positive” and had given a B+ and a B, which are highly dependent on expected investments in the mining and gas sectors, as also on future “political tensions”, according to ANF.
Standard & Poor’s warns that “if political tensions were to resurrect and would cause economic uncertainty, or if the planned investments were not going to materialize, these grades could be forced to go down.”

http://www.laprensa.com.bo/diario/actualidad/economia/20110824/bolivia-aun-es-fragil-por-“tensiones”_4456_7920.html

NEW YORK Aug 22 (Reuters) – Standard & Poor’s on Monday said it may upgrade Bolivia’s credit ratings if planned new oil and gas investments translate into stronger growth prospects for the country.

S&P revised to positive from stable the outlook on Bolivia’s foreign-currency rating, just three months after raising it to B-plus. A positive outlook means an upgrade is possible in the next two years.

S&P based its decision on a number of large infrastructure and investment projects that have been announced in the past three months, such as an agreement between India’s Jindal Steel and the Bolivian government to invest $2.1 billion in the El Mutun iron ore mine, one of the largest in the world.

Exploration agreements for the gas and lithium sectors have also been announced, S&P noted.

“If some of the projects go according to plan, foreign direct investment will increase significantly, raising growth prospects and the outlook for exports,” S&P’s analyst Richard Francis wrote in a report.

With the decision, S&P caught up with Moody’s Investors Service, which already had a positive outlook on Bolivia’s sovereign rating.

Bolivia is currently rated at B-plus by all three major ratings agencies, including Fitch Ratings.

http://af.reuters.com/article/energyOilNews/idAFN1E77L17720110822

I believe in proactiveness and I see a half glass full not a half glass empty. I understand how critical such grades mean for a country. Just remember what happened to the USG and the American Economy when loosing their AAA+ status… In our Bolivian case, it is by far TOO OPTIMISTIC to believe that huge amounts of investment like Jindal will materialize over the medium run. Jindal does not have access to energy and will have to settle for exporting ore concentrates as its best. So our reality is by far lower than the grading Standard & Poor’s gave us. All of the above without even considering “political tensions.”

Published by Bolivian Thoughts

Senior managerial experience on sustainable development projects.

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