Lack of economic information increases Bolivia’s country risk

• The population distrusts the Government’s data and the national economy, which is why they chose to reduce their expenses and prioritize their purchases, which slows down the dynamism of the domestic market.

The lack of information on international reserves, of the Gross Domestic Product (GDP), added to the shortage of dollars generates distrust at the international level and causes an increase in the level of country risk. Meanwhile, the Government assures that Bolivia has positive economic indicators compared to other nations.

The data in Bolivia became a scarce commodity, since we do not know the data on the international reserves, we only know that all the resources from the sale of gold were spent, just as it is known that the Special Drawing Rights (SDRs) were already used. of the International Monetary Fund (IMF), laments economist Gonzalo Chávez on his social networks.

Risk

Meanwhile, the economist and former director of the Central Bank of Bolivia (BCB), Gabriel Espinoza Y., wrote on his social network X @g_espinoza, few days back, that “the country risk of #Bolivia that has reached on Wednesday, surpassed the 1,800 basis points (bp.) and yesterday closed at 1,791 bp., which means that the country would have to pay an interest rate of more or less 24% to be able to access credit in the private debt markets. This happens in a week in which the importance of politics has taken over the economy on the President’s agenda, which is why his Minister of Economy came out to deny a crisis that is palpable.”

He adds: “The performance is so bad (and the distrust it arouses in international markets is so great), that if we compare the situation with the beginning of the year, not even Argentina, with everything and the ongoing electoral process, has deteriorated as much as Bolivia. Even worse, Venezuela has improved its position.”

“Personally, I believe that in addition to the focus on politics, what has strongly penalized the perception of risk was the failure to take advantage of opportunities to give a speech about change in economic management. The denial of the crisis by Arce and his team, contrary to what they are trying to achieve, brings uncertainty to the population, and much worse than bad, it is uncertain,” he maintains.

The lack of information slows down the national economy and affects the country’s risk rate, said Chávez in time to ensure that there will be no second bonus, since to achieve this payment Bolivia will have to grow by 10% in the second quarter, which it will not.

He regretted that there is no data on the execution of public investment, which increases the climate of uncertainty, especially with repressed inflation and the mirage of an unemployment rate of 3.75%.

80% work in the informal economy, that is, 3.6 million people survive in the sector, since they do not have employment but rather a precarious occupation, said Chávez, reiterating that the economy is slowing down.

Distrust

A few days ago, they presented the study “1000 Bolivians Say” – 4th. Wave, prepared by OMG (Omnicom Media Group), which points out that Bolivians distrust the economy and see uncertainty for the next half of 2024.

They also decided to reduce their expenses and prioritize their purchases, which are mostly spent on health and food, the majority do not have enough to save in financial institutions.

Growth

Chávez indicates that the national economy began to slow down since 2014, only that the Government never admitted, and now it will not grow at 4.8% as the authorities estimated, since in the first quarter a figure of only 2.2% was recorded. .

There are also no current GDP figures for the second quarter and foreign trade figures come out a month late. Everything causes uncertainty and public opinion regrets the lack of transparency of the authorities and institutions in charge of processing economic data.

Deceleration

International organizations projected a growth of less than 2% for the current administration, and the percentage decreases for the following years, which means that the deceleration of the national economy will continue.

However, the Government assures that with the projects it has underway, such as lithium and biodiesel, as well as the Mutún Steel plant, among others, they will generate important resources for the country, more than gas, even.

Official

Meanwhile, economic analyst Martín Moreira points out that Bolivia has positive economic indicators compared to other countries; However, the risk rating agencies do not take them into account, because “they do not forgive” the fact that the State does not depend on its financial conditions, according to ABI.

“According to the country’s economic indicators, a positive outlook can be observed (…). Despite these achievements, it is regrettable that the risk rating agencies do not take them into account,” said the expert.

It is projected that exports will exceed 10,000 million dollars by the end of the year, less than the more than 13,000 million registered in 2022. A law was approved to strengthen the Net International Reserves (RIN), but the figures are unknown, it is estimated that It does not exceed 2,000 million after the sale of gold and an investment plan of 2,800 million was drawn up in the industrialization of lithium, subject to the approval of agreements with Chinese and a Russian company.