Fitch Upgrades Bolivia to 'B'; Outlook Stable

[Judi Lynn]

September 08, 2009 04:04 PM Eastern Daylight Time
Fitch Upgrades Bolivia to 'B'; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings today upgraded Bolivia's foreign and local currency Issuer Default Ratings (IDR) to 'B' from 'B-'. The Rating Outlooks on both ratings are Stable. At the same time, Fitch has affirmed the short-term rating at 'B' and upgraded the country ceiling to 'B' from 'B-'.

The maintenance of macroeconomic stability in the context of political and social turbulence and an unfavourable external environment supports the upgrade of Bolivia's sovereign ratings.

Favourable public and external debt ratios following debt relief under HIPC and MDRI, international reserve accumulation and abundant natural resources also underpin sovereign creditworthiness. At the same time, Bolivia's ratings remain constrained by structural weaknesses, as denoted by poor governance and business climate indicators, as well as its high commodity dependence.

'Although resurgent political pressures in advance of December 2009's general elections could combine with the deteriorating economic environment to result in renewed civil unrest, this is not expected to derail macroeconomic stability,' said Casey Reckman, Associate Director in Fitch's Sovereign group. Political tensions have eased somewhat as the stalemate over the draft constitution ended with its approval in a January 2009 referendum. Furthermore, increased discretionary public spending and conditional cash transfers may continue to mitigate social pressures arising from economic deceleration and declining remittances.

Bolivia has confronted reduced commodity prices, contracting export volumes and lower workers' remittances as a result of the global economic crisis. Nevertheless, limited foreign participation in Bolivia's banking system as well as the absence of toxic assets or sizeable international funding has shielded the country from fallout from the global crisis through direct financial channels. Fitch expects real GDP growth to decelerate to 1.6% in 2009 in response to the less favourable external environment before recovering to 2.8% in 2010 with some support from informal economic activity.

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[Peace Patriot]

1. Get this...

"...limited foreign participation in Bolivia's banking system as well as the absence of toxic assets or sizeable international funding has shielded the country from fallout from the global crisis through direct financial channels. Fitch expects real GDP growth to decelerate to 1.6% in 2009 in response to the less favourable external environment before recovering to 2.8% in 2010 with some support from informal economic activity."

Translation: The Bushwhacks were unable to crash Bolivia's economy with their Financial 9/11!

Another country that landed on its feet: Venezuela, which was similarly insulated by very smart leftist economic policies, and also, with its booming economy (nearly 10% economic growth rate over the last five years--2003-2005), and its accumulation of $43 billion in international cash reserves--even while it provided big increases in the funding of all social programs--Venezuela has been able to bail poorer countries out of ruinous World Bank/IMF debt, put them on their feet and create healthy trading partners for itself, Brazil and other countries. Argentina and Bolivia have particularly benefited from Venezuela's progressive policies. That's probably why our corpo/fascist press hates Chavez so much.

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I'm not sure what the following means: "Fitch expects real GDP growth to decelerate to 1.6% in 2009 in response to the less favourable external environment before recovering to 2.8% in 2010 with some support from informal economic activity."

"External environment" maybe means the "shock and awe" to first world countries of the Bushwhack Financial 9/11? So, they will be slower to invest in Bolivian enterprises? (Just read that French President Sarkozy was in Bolivia making various deals, including for lithium.) And they expect Bolivia to start showing growth in 2010. But "support from informal economic activity"? Dunno what that means. (Decriminalization of coca leaves?)

One other thing: Bolivia's recovery from what Fitch antiseptically terms "political and social turbulence" was, in fact, a white separatist civil war, funded and organized right out of the US (Bushwhack) embassy in September 2008. President Morales threw the US ambassador out of the country, and got fully backed up by the rest of South America, through the South American "common market," UNASUR, which had only just been formalized that summer. They were magnificent in rallying to Morales and helping them deal with the white separatists (sans their US handlers). Chile, Brazil and Argentina were all pivotal in that effort. Chile called the UNASUR meeting (and its president, Michele Batchelet, took the UNASUR reps on a tour of Chile's Pinochet Musuem, to illustrate the dire consequences of US interference), and Brazil and Argentina (Bolivia's chief gas customers) made it very clear that they would not recognize or trade with a fascist state split off from Bolivia. (This insurrection occurred in the eastern provinces, where Bolivia's main gas reserves are located.) The "political and social turbulence" had nothing whatever to do with economic conditions. It was US-instigated rich white separatists trying to steal the country's main resource!

Well, two other things: I hardly see how the phrase "poor governance" is justified.

"Bolivia's ratings remain constrained by structural weaknesses, as denoted by poor governance and business climate indicators, as well as its high commodity dependence.

Evo Morales' government has held the country together, ended the unrest, and furthermore re-negotiated Bolivia's gas contracts to double the revenues, from $1 billion to $2 billion per year. That is not "poor governance." And I don't know what they mean. "Structural weakness"? Bullshit. Bolivia has never, ever been on a better path! "Business climate indicators?" France sure thinks things are looking good in Bolivia. Brazil and Venezuela have put up the money to build a major highway from Brazil's Atlantic coast, to the Pacific, through Bolivia, which will make Bolivia a major trade route, and Chile has granted Bolivia access to the Pacific (settling a long term dispute). Bolivia has a new Constitution which--at long last--codifies equal rights for Bolivia's indigenous majority. Bolivia's debt is low; it is rich in natural resources, the profits from which are now being used for development and for bootstrapping the poor, and it is engaged in all sorts of positive, forward-looking projects. Poor governance, my ass! Morales is a hero!

If by "business climate indicators" they mean that Bechtel Corp and its ilk (and the DEA) are no longer welcome in Bolivia, all I can say is: Viva La Revolucion!