A year ago, Bolivia’s country risk sat near 2,100 basis points — deep in distressed territory, the second-worst in Latin America after Venezuela. On Friday, it broke below 500 for the first time since before the 2023 currency crisis, landing at 477. That puts it below Argentina’s 508, a milestone President Rodrigo Paz Pereira celebrated while attending carnival festivities in Tarija. “That is extraordinary,” he told reporters. “The envious can die of envy.” This is part of The Rio Times’ daily coverage of Latin American affairs and financial news.
The speed of the decline is remarkable. Bolivia’s JPMorgan EMBI spread closed 2025 at 673, broke below 600 on January 26, and has now halved from its June 2025 peak. The driver is political, not yet economic. Paz Pereira, a center-right pragmatist who ended nearly 20 years of socialist rule when he took office in November, made three moves that international markets rewarded: eliminating a two-decade-old fuel subsidy that cost $2.5 billion (~R$15 billion) per year, securing over $8 billion (~R$48 billion) in multilateral financing commitments from the IDB, CAF, and Japan’s JICA, and repositioning the United States as a strategic partner — including the DEA’s return after a 17-year absence. Fitch upgraded Bolivia from CCC- to CCC in January.
Bolivia Faces Infrastructure, Economic Challenges
The next concrete step comes February 23, when CAF president Sergio Díaz-Granados visits to sign project agreements for Tarija and present a broader portfolio of infrastructure and social investments drawn from the bank’s $3.1 billion (~R$18.6 billion) five-year commitment to Bolivia. Paz also announced he will send a package of legislation to Congress after the carnival holiday to unlock public works funding, calling on lawmakers to become partners in the process.
Yet economists urge caution. Fernando Romero notes that much of the rapid decline reflects the “base effect” of starting from extreme levels, plus reduced fear of disorderly default — not structural reform. Bolivia’s economy remains in recession, inflation ran at 20.4% in December, the central bank continues to fund the treasury directly, and liquid reserves are critically low. A 65% approval rating and local elections on March 22 give Paz political capital, but the World Bank warned in January that Bolivia will be South America’s only economy in contraction this year. The market honeymoon rewards the promise of change. Delivering the substance is the harder part.
Related coverage: Brazil’s Morning Call | USA & Canada Intelligence Brief for Tuesday, February 17, 20