S&P Raises Bolivia Outlook

S&P has revised its outlook on Bolivia’s B minus rating to stable from negative on more promising macro policy and improvement in key economic and vulnerability indicators. “Political noise is likely to remain high over the coming months as the constituent assembly aims to conclude its work, but we expect the policy outlook to remain unchanged, says S&P analyst Lisa Schineller. “The focus should remain on a greater role of the state in the economy amid macroeconomic policy implementation supportive of economic stability.” Inflation exceeded 11% in October, year-on-year, while real GDP growth is projected at 4% in 2007 and 2008. The government is running a fiscal surplus and the country has a current account surplus, says S&P. Projected general government fiscal surpluses of 3.2% of GDP in 2007 and 2.5% in 2008 compare with a record 4.7% of GDP surplus in 2006. “Robust exports and remittances put Bolivia’s current account on track for another double-digit surplus of close to 11% of GDP this year,” says S&P, adding that reserves were more than $4.8bn in October. “Coupled with significant official debt relief, this puts Bolivia in a net external creditor position, compared with net external debt that averaged over 100% of current account receipts in 2003-2005,” S&P adds.