Bolivia, named after independence fighter Simon BOLIVAR, broke away from Spanish rule in 1825; much of its subsequent history has consisted of a series of coups and countercoups, with the last coup occurring in 1978. Democratic civilian rule was established in 1982, but leaders have faced difficult problems of deep-seated poverty, social unrest, and illegal drug production.
Central South America, southwest of Brazil
tin, natural gas, petroleum, zinc, tungsten, antimony, silver, iron, lead, gold, timber, hydropower
Population - distribution
a high altitude plain in the west between two cordillera of the Andes, known as the Altiplano, is the focal area for most of the population; a dense settlement pattern is also found in and around the city of Santa Cruz, located on the eastern side of the Andes
Spanish (official) 60.7%, Quechua (official) 21.2%, Aymara (official) 14.6%, foreign languages 2.4%, Guarani (official) 0.6%, other native languages 0.4%, none 0.1%
Santa Cruz 2.107 million; LA PAZ (capital) 1.816 million; Cochabamba 1.24 million; Sucre (constitutional capital) 372,000 (2015)
- Conventional long form
- Plurinational State of Bolivia
- Conventional short form
- Local long form
- Estado Plurinacional de Bolivia
- Local short form
- Geographic coordinates
- 16 30 S, 68 09 W
- Time difference
- UTC-4 (1 hour ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; accepts ICCt jurisdiction
Bolivia is a resource rich country with strong growth attributed to captive markets for natural gas exports to Brazil and Argentina. However, the country remains one of the least developed countries in Latin America because of state-oriented policies that deter investment and growth.
- External debt stocks
- US$ 9,848,995,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -1,853,713,739
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 10,831,641,389
- Exports of goods and services
- US$ 8,311,504,920
- Total Merchandise Trade
- FDI, net inflows
- US$ 503,444,027
- Commercial Service Exports
- US$ 1,219,705,773
soybeans, quinoa, Brazil nuts, sugarcane, coffee, corn, rice, potatoes, chia, coca
mining, smelting, petroleum, food and beverages, tobacco, handicrafts, clothing, jewelry
- natural gas, silver, zinc, lead, tin, gold, quinoa, soybeans and soy products
- Brazil 28.1%, Argentina 16.9%, US 12.1%, Colombia 6.3%, China 5.3%, Japan 4.7%, South Korea 4.3% (2015)
- machinery, petroleum products, vehicles, iron and steel, plastics
- China 17.9%, Brazil 16.5%, Argentina 11.8%, US 10.6%, Peru 6.2%, Japan 5.2%, Chile 4.6% (2015)
- Country Risk Rating
- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
- Business Climate Rating
- The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Intercompany transactions run major risks in the difficult environments rated C.
- Significant natural resources (gas, oil, zinc, silver, gold, tin, and manganese)
- Membership of the Andean Community and association with Mercosur
- Large foreign currency reserves
- Little economic diversity and reliance on oil and gas
- Landlocked country
- Size of the informal sector
- Insecurity and drug trafficking
- Risk of social unrest
In 2016, the low levels of oil and gas prices were a drag on Bolivian economic growth. In 2017, there should be a slight upturn in growth thanks mainly to continuous public spending. The government presented a five-year investment program (2016–2020), focused on developing the infrastructure and public companies in the energy sectors (exploration and development of new gas fields in particular). Private investment is however likely to remain weak because of the loss of investors’ appetite for emerging markets, particularly in the energy sector, and the uncertain legal context in Bolivia. The lack of diversity within the economy also reduces possibilities for investments in non-energy sectors. Household consumption is expected to decline under the impact of inflation, despite the hoped for positive effect of public investments on employment, and the existence of various social programs. Exports should however benefit from the slow rise in oil and gas prices and the anticipated increase in Brazilian and Argentinian demand (its leading customers).
Inflation is likely to rise with increasing food prices following the drought towards the end of 2016, which has impacted on domestic food supplies. The maintenance of a stable rate of exchange and subsidies on basic food imports should however prevent any excessive rise.
In 2016, the public deficit increased with the government’s expansionary fiscal policy and the decline in revenues (licenses and royalties from the gas, oil and mineral companies, in particular). The fiscal deficit in 2017 is likely to remain high but should improve with the expected increase in energy sector revenues as oil and gas prices recover. However, the continuation of the expansionary public spending policy will limit progress on eliminating the deficit. The five-year investment program introduced by the government includes annual expenditure of around USD 10 billion aimed at creating and improving infrastructures, as well as increasing the production capacities of the mining sector. In funding the program, Bolivia will have make use of foreign debt and financial support from its strategic partners (in particular China). That country made a commitment to provide finance of almost USD 5 billion for specific projects during the official visit of the Chinese Minister of Foreign Affairs in October 2016. In terms of monetary policy, the central bank is likely to maintain the peg of the currency to the US dollar despite the reduced inflow of currency, which is a draw on the reserves. The latter are however still at a satisfactory level, estimated in 2016 at 12.4 months of imports.
In terms of foreign trade, the disappearance of the foreign trade surplus will continue to undermine the current account balance. In 2016, the deficit increased as a result of the foreign trade balance deficit caused by low oil and gas prices and the loss of competitiveness of non-energy exports because of the relative stability of the local currency in the face of the depreciation of other leading regional currencies. In 2017, earnings from gas exports (almost half of all exports) should benefit from of the slow recovery in oil and gas prices and the hoped for increase in demand in its leading trading partners (Brazil and Argentina). The income balance deficit is likely to contract slightly thanks to a reduction of the margins of the multinationals operating within the mining sector, with consequences for the amount of the dividends sent abroad. The balance of transfers should, on the other hand, remain in surplus sustained by remittances from workers abroad.
In power since December 2005, the President, Evo Morales, and his MAS (Movimiento al Socialismo) party have suffered waning popularity as the economic situation deteriorates and the numbers of corruption scandals involving members of the party multiply. Although voters rejected the government’s proposal to extend the limit on presidential terms of office (President Morales is in his third term of office), the government does not seem to be prepared to accept this defeat. It is therefore likely to call a second referendum in 2017 provided that the hoped for improvements in economic terms materialise.
The business climate is likely to remain mediocre, with the legal uncertainties (expropriations and nationalisations remain a possibility) and the prohibition on any possible recourse to international arbitration, continuing to undermine the business climate. The failure of the government to meet the expectations of the various social groups is also a potential source of increased popular unrest.