Bolivian 'miracle' results in fast expansion, resilience to volatility

Bolivia, a land-locked country of 10 million in the center of South America that is often associated in the past with poverty, has made significant progress in recent years under the leadership of a former cocoa farmer and is managing a solid economic expansion amid resiliency to external volatility.

"Bolivia has partially offset commodity price declines by raising its natural gas production and maintaining long-term export contracts to neighboring markets," a report sent on Wednesday to Latin Business Daily by an official at Fitch Ratings said.

Fitch, which upgraded Bolivia to a "BB" category in July, reported the country shows "improvements in the sustainability of its gas production and the reduction in regulatory uncertainty and nationalization risks." 

Deep drilling and developments around existing hydrocarbon fields could yield sufficient gas output to meet local demand and export contracts at least until 2019, it said. The country´s public debt is only 30 percent of its Gross Domestic Product, and foreign reserves are 46 percent of GDP.

"With these factors in place, the Bolivian economy could absorb adverse shocks and adopt more counter-cyclical policies than other commodity exporters in the 'BB' category," the Fitch report said.

Separately, a spokeswoman at the Economy and Finance ministry of Bolivia sent a ministry statement to Latin Business Daily in which the government stressed that according to the International Monetary Fund, "Bolivia is no longer a poor country."

The spokeswoman also sent a press release published a week earlier in which the country´s Economy and Finance minister, Luis Arce, attributed what he described as the Bolivian "miracle" to President Evo Morales' decision to nationalize hydrocarbon assets.

Bolivia, for the first time in its history, posted the biggest economic growth in Latin America of 3.4 percent in 2009. Then, in 2014, it once again posted the highest economic growth in the region, according to the ministry.

In the first three months of this year, the country´s economy has expanded 4.6 percent which also leads the region. That trend is expected to continue through 2015, according to the ministry.

Evo Morales, formerly a cocoa farmer and activist, was elected president of Bolivia in 2006. He was re-elected in 2009 and 2014. When he was first elected, Bolivia was widely known as the poorest nation in South America.

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