Bolivia’s three economic challenges in 2022

RIO DE JANEIRO, BRAZIL – In 2022, Bolivia will have economic reactivation after the Covid-19 pandemic among its main challenges, with the agricultural and industrial sector playing a key role, as well as improving the gas business.

ECONOMIC RECOVERY

The government has established a budget for 2022 of over US$5 billion for the post-pandemic economic recovery to be allocated to the productive sector (42.5%), public infrastructure (29.9%), the social area (17.2%) and other sectors (10.5%).

The government’s economic projections estimate that the country will post 5.1% growth, 3.4% inflation and an 8% fiscal deficit, and that president Luis Arce’s administration will seek to fulfill its electoral pledge to industrialize the country with import substitution.

FOCUSING ON AGRICULTURE AND LIVESTOCK

The agricultural and industrial sector, which in 2021 contributed 18% to GDP, is considered one of the areas of greatest growth and economic dynamics, surpassing hydrocarbons, which in recent years have been the most profitable.

Private agricultural entrepreneurs expect alliances with the public and communal sector for the next administration to “supply the large international markets” as well as growth of the agricultural area, which between 2021 and 2020 grew only 1.4%, in addition to the use of biotechnology to improve yields.

IMPROVING THE GAS BUSINESS

The drafting of a new legal framework in the hydrocarbons area after 16 years is considered an opportunity to attract more foreign investments for the exploration of new fields and thus address the depletion of several gas fields in order to avert a potential decline in exports.

Both the government and experts agree that these reforms must include changes in the tax and royalties regime or in the role of state-owned Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) within the sector, so that new gas reserves may be found and thereby prevent fuel imports in the medium term.