Reuters US Economy
By Monica Machicao and Lucinda Elliott
LA PAZ (Reuters) -Bolivia is negotiating multilateral financing that will exceed $9 billion for public and private projects, Economy Minister Jose Gabriel Espinoza said Tuesday in the first major policy announcement since centrist President Rodrigo Paz took office this month.
The package, arranged with a consortium of lenders, exceeds the government's initial $4–$5 billion forecast and is designed to stabilize an economy battered by high inflation, a widening fiscal deficit, and a shortage of foreign currency.
Espinoza, who announced the aid talks during a press conference on Tuesday, said roughly a third of that financing is expected to arrive within the next 60 to 90 days.
Bolivia's U.S. dollar bonds rose on Tuesday and were both trading at their highest levels since 2022, at around 92 cents on the dollar each, according to LSEG data. Bolivian bonds have risen close to 60% this year, among the best performers in JPMorgan's emerging markets bond index.
Funds from creditors including the World Bank and the Development Bank of Latin America (CAF) will support private sector initiatives in infrastructure, renewable energy, and financial inclusion, the minister told Reuters in an interview ahead of the press conference.
"It's not just public sector borrowing," Espinoza said. "This marks a new phase of development where the private sector will play a very important role," he said.
Bolivia, a major producer of natural gas and grains, is facing one of its worst economic crises in decades after years of state-heavy policies and nationalization under the previous socialist administration deterred foreign investment and strained public finances.
Paz, who took office on Nov. 8, has pledged a market-oriented approach to attract foreign investment while avoiding abrupt shocks to the economy that could undermine Bolivia's social safety net.
As part of Tuesday's announcement, the government scrapped the country's wealth tax, citing its role in discouraging investment. Taxes on financial transactions were also lifted.
The fresh credit lines and tax measures still require congressional approval before they can take effect.
A more austere 2026 budget will include a 30% cut in public spending, Espinoza said. The government took the spending reduction decision on its own and not as a result of any pressure from the International Monetary Fund (IMF), he said, adding Bolivia remains open to dialogue with the Fund.
"If they (the IMF) approach us, that is welcome, but in the meantime we will proceed with our plans," he told Reuters.
CRYPTO INTEGRATION
As part of a broader modernization push, the government will integrate cryptocurrencies into the formal financial system, starting with stablecoins, Espinoza said.
Banks will be allowed to offer crypto services so that they "begin to function as a legal tender payment instrument," Espinoza said. These services include savings accounts, credit cards and loans.
Cryptocurrency adoption in Bolivia surged after a prior ban was lifted last year and analysts say volumes have since grown sharply as more customers use the assets as a hedge against the depreciating boliviano.
"You can't control crypto globally, so you have to recognize it and use it to your advantage," Espinoza said, adding the policy could boost financial inclusion.
(Reporting by Lucinda Elliott in Montevideo and Monica Machicao in La Paz. Additional reporting by and Daniel Ramos in La Paz and Rodrigo Campos in New York. Editing by Christian Plumb, Nick Zieminski and David Gregorio)
New York Post
AlterNet
Bloomberg Law
The List
The Daily Beast