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Bolivia Updates Banking Regulation to Boost Economic Growth

La Paz, Bolivia - The Bolivian government has implemented a series of regulatory updates aimed at promoting economic growth and improving access to financial services for citizens.

Regulatory Updates

According to reports, the Financial Services Law enacted in 2013 established the Financial Stability Board, comprising key stakeholders such as the Ministry of Economy and Public Finance, the Central Bank of Bolivia, and the Supervision and Control Authority of Pension and Insurance. This board is responsible for issuing decrees and resolutions to regulate the banking sector.

Under the new regulations, the state has been given a greater role in managing financial institutions, including:

  • Directing them to offer credit to sectors deemed strategic by the government
  • Fixing interest rates that banks can charge
  • Determining loan repayment terms
  • Setting collateral requirements

New Tax on US Dollar Exchanges

In 2012, the government introduced a tax on U.S. dollar exchanges in banks and exchange houses. This tax does not affect individuals or companies using dollars but reduces financial institution profits generated by the difference between buying and selling rates.

Additionally, a Financial Transaction Tax (ITF) of 0.03% is applied to all bank transfers in U.S. dollars within and leaving the country. Due to dollar scarcity, most banks charge an extra fee ranging from 5% to 5.6%.

Exchange Rate Controls

Bolivia’s official exchange system is described as an “incomplete crawling peg.” The Central Bank of Bolivia has maintained a fixed exchange rate of 6.96 bolivianos (Bs) per US dollar for sale and 6.86 Bs/$1 for purchase since October 2011.

However, starting in February 2023, due to dollar shortages, a parallel market emerged with higher spreads. The average rate in the parallel market stood at:

  • 7.4 Bs/$1 to sell as of July 2023
  • 7.6 Bs/$1 to buy as of July 2023

Foreign Banks and Correspondent Banking

No U.S. banks currently operate in Bolivia. However, several local banks have correspondent banking arrangements with U.S. banks. Interested parties can contact the National Association of Banks (ASOBAN) for additional information: https://www.asoban.bo

Conclusion

The Bolivian government’s efforts to regulate the banking sector and promote economic growth are expected to benefit citizens and businesses alike.

Sources:

  • Central Bank of Bolivia
  • Financial Services Law, 2013
  • National Association of Banks (ASOBAN)
  • U.S. Department of State Investment Climate Statements