Bolivia told investors it's close to agreeing on IMF program

Bolivia has indicated that it is nearing an agreement with the International Monetary Fund (IMF) to address its economic challenges, according to recent developments. The country’s economy has faced significant headwinds, including a slowdown in hydrocarbon production, reduced agricultural output due to El Niño effects, and disruptions from road blockages and foreign exchange (FX) shortages. These factors contributed to a real GDP growth rate of 2.1 percent in the first three quarters of 2024, with inflation reaching 10 percent—the highest level in over a decade.

The fiscal deficit has exceeded 10 percent of GDP in 2023–24, driven by declining hydrocarbon revenues, tax exemptions, and increased social spending. Public debt has risen to 95 percent of GDP, and the central bank financed the deficit amid constrained external financing options. Meanwhile, the financial sector remains resilient, with a capital adequacy ratio of 13.5 percent and low non-performing loans at 3.2 percent of total loans.

IMF Executive Directors have emphasized the need for urgent fiscal consolidation, exchange rate realignment, and structural reforms to restore macroeconomic stability. They have called for shift away from dollar peg, improved fiscal management, and enhanced transparency and governance. The next Article IV consultation with Bolivia is expected to follow the standard 12-month cycle.

Investors are closely watching how Bolivia navigates these reforms and whether the IMF program will provide the necessary support to stabilize the economy and restore investor confidence.