Financial Crime World

Bolivia’s Public Debt Set to Exceed 70% of GDP by 2026

Washington D.C., [Date] - The International Monetary Fund (IMF) has warned that Bolivia’s public debt is likely to exceed 70% of its Gross Domestic Product (GDP) by 2026, due to a more moderate pace of fiscal consolidation than previously anticipated.

Fiscal Consolidation Challenges

Bolivia’s gross financing needs are projected to exceed 15% of GDP in 2021 and decline thereafter. The country’s public debt has been rising steadily over the past few years, driven by increased government spending and lower-than-expected revenue growth.

Government Response to COVID-19 Pandemic

The Bolivian government responded to the COVID-19 pandemic with a series of policy measures aimed at supporting vulnerable populations and mitigating the economic impact of the crisis. These measures included:

  • Targeted Cash Transfers: Worth around $1.1 billion, or 3% of GDP
  • Subsidies: For vulnerable populations, including low-income households and small businesses
  • Health Spending: To support the healthcare system and purchase medical equipment
  • Liquidity Injections: To increase commercial banks’ lending capacity
  • National Reactivation Employment Plan: Aimed at creating new jobs in key sectors such as infrastructure, healthcare, and education

Banking Sector Concerns

The IMF has also highlighted concerns about the banking sector, which is considered liquid but faces challenges related to profitability and capital adequacy. The sector’s loan-to-deposit ratio has risen to 100%, and profitability has decreased due to deferred loan repayments and declining interest rates.

Economic Outlook

Despite these challenges, Bolivia’s economy is expected to recover gradually in the coming years, driven by a pickup in agricultural production, improved mining output, and increased investment in key sectors such as infrastructure and tourism.

Key Economic Indicators

  • Public Debt: Expected to exceed 70% of GDP by 2026
  • Gross Financing Needs: Projected to exceed 15% of GDP in 2021 and decline thereafter
  • Banking Sector: Considered liquid but faces challenges related to profitability and capital adequacy
  • Economy: Expected to recover gradually in the coming years, driven by a pickup in agricultural production, improved mining output, and increased investment in key sectors.