Government rebukes Fitch Ratings for ‘ignoring’ Bolivia’s economic strength

For not taking into account and ignoring Bolivia’s economic strength and its low inflation, the Ministry of Economy and Finance of the South American country issued this Wednesday a note of disagreement to the international rating agency Fitch Ratings for granting the South American country a risk rating of ‘B-‘, impacting negatively on its credit perspectives.

The Minister of Economy, Marcelo Montenegro, informed journalists that the note sent to this rating agency explains that Bolivia has achieved significant macroeconomic achievements compared to other countries.

He mentioned low inflation, fiscal deficit reduction, good economic growth, or the maintenance of stability under an adverse international context caused by the Covid-19 pandemic and the conflict between Ukraine and Russia.

“We do not share the idea of Fitch Ratings. We have sent them a note to state that we do not agree with those elements because it has not been evaluated that Bolivia, in an environment of volatility and uncertainty, has been able to maintain stability”, he asserted.

Fitch Ratings downgraded on Tuesday Bolivia’s long-term foreign and local currency issuer default ratings from ‘B’ to ‘B-‘, revising the rating outlook from stable to negative.

For the minister, the rating agency did not consider that Bolivia has the lowest inflation in the region, in addition to having record exports, high tax revenues, or GDP growth equal to 4.3 percent during the third quarter of 2022, among other indicators that reflect the stability of the economy.

Montenegro regretted that Fitch Ratings only focused on the variation of Net International Reserves (NIR) without considering the strengths of the Bolivian economy.

However, he said that the 2023 Financial Fiscal Program foresees a positive variation for 2022, based on factors such as the “increase in exports of products such as urea, lithium carbonate, iron, the substitution of imports and the export of non-traditional products, in addition to the potential export of electric energy for the second half of 2023”.

The minister said that this encouraging outlook must also be added to the income from loan disbursements to continue with the economic reactivation process, the support to the export sector, and the priority maintenance of resources in the national economy.

In addition to the gold purchase law aimed at strengthening the international reserves that are being debated by the legislature.

Finally, Montenegro criticized that the rating agency, in its evaluation, has not taken into account the high levels of “Bolivianization” (use of the national currency) of the economy in the financial system, reflecting the confidence in the Bolivian people and the soundness of the financial system, which entails a lower degree of macroeconomic vulnerability.

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