S&P doowngrades Bolivia’s ratings
S&P did not rule out further downgradings in the coming months
Standard & Poor’s (S&P) downgraded Bolivia’s long-term credit rating from ‘CCC+’ to ‘CCC-‘ with a negative outlook. This decision was driven by increasing debt servicing costs and a deteriorating external financial profile, which could make it harder for the landlocked country to access financing and potentially hinder its ability to pay off debt in the coming months.
S&P highlighted that political gridlock and limited access to external bond markets prevented Bolivia from improving its external liquidity and fiscal position, posing economic and monetary stability risks. It also warned that ongoing political disputes, especially with upcoming elections, will likely limit the government’s ability to tackle macroeconomic issues like the growing parallel exchange rate gap and rising inflation.
This downgrade reinforces concerns about Bolivia’s capacity to meet its financial obligations and is further complicated by its inclusion on the Financial Action Task Force (FATF) gray list, which could further isolate it from the global financial system. S&P indicated that another downgrade could occur within the next six to twelve months if debt service compliance risks increase, even considering debt exchange or restructuring as a potential default equivalent.
However, the rating could be raised if the Bolivian government implements decisive policies to strengthen external liquidity and achieve a more sustainable fiscal profile. Addressing the deterioration of macroeconomic imbalances would be a first step toward improving investor confidence and gaining better access to external debt markets, S&P noted.
Other agencies like Moody’s and Fitch Ratings have also recently downgraded Bolivia, all concurring on the persistent risks of default and a balance of payments crisis due to negative economic indicators and significant political and social uncertainty.
Adding to Bolivia’s economic woes, inflation surged to 5.21% in June, marking the highest monthly increase in recent years. This brings the cumulative inflation for the first half of 2025 to a staggering 15.53%, more than double the government’s annual forecast of 7.5%. Meanwhile, year-on-year inflation stood at 24%
The National Institute of Statistics (INE) attributed this outcome to road blockades orchestrated by former President Evo Morales’ supporters in protest against his ineligibility for upcoming elections.
INE Director Humberto Arandia acknowledged the severe impact of these blockades on the cost of living, particularly on food prices. He declined to project year-end inflation.
