Bolivia achieves very low overall compliance with international standards and codes, with a score of 6.7 out of 100 in our Standards Compliance Index. The predominance of standards for which there is insufficient information makes an accurate assessment of the current situation difficult. For the macroeconomic fundamentals, Bolivia is either in low compliance or there is insufficient information regarding compliance. Bolivia does not subscribe to the Special Data Dissemination Standard prescribed by the International Monetary Fund, and its anti-money laundering regime has significant weaknesses both in legislation and implementation. There was evidence of progress in the area of financial supervision and insolvency during 2005, when the Congress strengthened the autonomy and powers of the country's banking regulator. Authorities were working on draft bills to address weaknesses in the corporate restructuring and insolvency framework. Bolivia planned to require mandatory use of international accounting standards by the end of 2007.

Macroeconomic Policy and Data Transparency

Bolivia is not a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS). However, since November 2000, it has been a participant to the IMF's General Data Dissemination System (GDDS). The GDDS is less prescriptive than the SDDS. In 2003, the IMF noted that significant advances had been made in recent years, but that there was a need for improvements in a number of areas. The timeliness and coverage of economic statistics in Bolivia is generally adequate for monitoring purposes. Many ministries and other official institutions, including the National Institute of Statistics (INE) post statistical information on the Internet. More »

According to a 2004 Bulletin published by the Central Bank of Bolivia (BCB), Law 1670 on the Central Bank of Bolivia provides an adequate legal framework for the formulation of monetary policy. The Bolivian Government has repeatedly expressed its commitment to reduce the country's vulnerabilities and promoting financial stability, including creating the conditions for a more flexible exchange rate regime over the medium term. However, there is no publicly available sufficient information to make an assessment as to Bolivia's overall level of compliance with the International Monetary Fund's, Code of Good Practices in Monetary policies. More »

The sixth review under the Stand-By agreement with the International Monetary Fund (IMF) was conducted prior to the election of Evo Morales as president in December 20005. The authorities at that time were committed to further structural reform actions in the fiscal and financial sector areas. These include the following structural benchmarks under the Stand-By Agreement with the IMF: (1) Submitting to congress a draft (budget framework law) aimed at enhancing the budget process at all levels of government. (2) Preparing a draft tax reform bill, including a personal income tax, for consideration by the new government. (3) Advancing with the program to register all public sector employees and pensioners, as well as with the implementation of a registry system on subnational debt. Furthermore, in the Letter of Intent to the IMF in July 2005, the administration stated that it was preparing an Organic Budget Law which would set hard budget constraints at all levels of government and make the budget more transparent in defining fiscal priorities. It is anticipated that the approval of a law regulating the appeals process defined in the code would reinforce the ability of the Tax Superintendency to enforce legislation. More »

Institutional and market infrastructure

Implemented in August 2003, the Voluntary Reorganization Law is a progressive adaptation to insolvency practices that accommodates the interests of modern creditors and debtors with multiple options. The law provides debtors and creditors with the possibility of reaching one of the following three solutions: (1) corporate reorganization; (2) voluntary liquidation; and, in the event no compromise is possible, (3) the filing for bankruptcy. However, there is no publicly available information regarding Bolivia's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank. More »

Although most accounting regulations follow international principles, Bolivian accounting procedures and reports do not yet conform to world standards. It is common for Bolivian firms to maintain various sets of books: one set for the tax authorities, another for its bankers, and another for the management's own use. Domestic listed companies are permitted to use International Financial Reporting Standards (IFRSs) and, according to Ernst & Young, the introduction of mandatory application of IFRSs is expected to be introduced by the end of 2007. More »

In November 2003, the OECD published a White Paper on Corporate Governance in Latin America in which it provides a summary review of Bolivia's initiatives on corporate governance. According to the paper, the Bolivian government drafted a bill in early 2003 titled the "Law on Governance of Stock Companies". In November 2003, the bill was submitted to the Bolivian Congress, but many companies had expressed opposition to its content. As of June 2006, no further information was available on the process of the bill. Moreover, a Centre of Corporate Governance is also being established. Overall the lack of transparency in the legal system and reputed corruption amongst lower level government officials remain as obstacles to establishing effective corporate governance in Bolivia. However, there is not enough information publicly available to make an assessment as to Bolivia's overall level of compliance with this standard. More »

In Bolivia, professional standards relating to accounting and auditing are issued by the Association of Auditors of Bolivia (Colegio de Auditores de Bolivia - CAUB) through its National Technical Council on Auditing and Accounting. In cases where there are no local auditing requirements for a specific issue, companies may use international standards. However, there is no information publicly available as to Bolivia's compliance with the International Standards on Auditing (ISAs) promulgated by the International Federation of Accountants (IFAC). More »

According to an IMF 2003 report, Bolivia's system to prevent and suppress money laundering fulfills most of the FATF 40 recommendations and applies to the insurance, stock market, and financial sectors. However, in spite of advances in combating money laundering, Bolivia's anti-money laundering system still has many weaknesses. Although terrorist acts are criminalized under the Bolivian Penal Code, there are no explicit domestic laws that criminalize the financing of terrorism or grant the Government of Bolivia (GoB) the authority to identify, seize, or freeze terrorist assets. In spite of recommendations by both the International Monetary Fund (IMF) and the Financial Action Task Force for South America (GAFISUD), the Government of Bolivia (GOB) has done little to strengthen the Financial Intelligence Unit - Unidad de Investigaciones Financieras (UIF). Limitations in its reach and weaknesses in its basic legal and regulatory framework continue to hamper the UIF's effectiveness as a financial intelligence unit. In order to address the problems faced by Bolivia's anti-money laundering regime, the UIF has proposed various changes that will amend Law 1768 and the UIF regulations. These changes would make money laundering an autonomous crime, penalized by a minimum prison term of fifteen years; increase the number of predicate offenses for money laundering, as well as the number of entities obligated to file financial reports with the UIF; and allow for the seizure of assets and the use of certain special investigative techniques. More »

The Act on Loan and Estate Management, that modified the Act of the Central Bank, established that the Central Bank of Bolivia was in charge of adopting general policy for the monetary, exchange and payment system, as well as enforcing those policies. A real-time gross settlement (RTGS) system for transferring inter-bank settlements of reserve balances with immediate finality is in place. The system, called System of Large Value Payments (SIPAV) allows banks to affect transfers into and out of their (single) reserve account and obtain their reserve balance. The system is not used for transfers on behalf of customers. Since 1998, the Central Bank of Bolivia has been working on the modernization and reform of the payment system of the country. However, there is no publicly available information regarding Bolivia's level of compliance with the Bank of International Settlements' (BIS) Core principles for Systemically Important Payment Systems. More »

Financial Regulation and Supervision

According to an IMF 2005 report, the authorities in Bolivia have made progress with financial sector reforms, and are planning further reform steps. Provisioning and reserve requirements were tightened and congress approved a law in June 2005 establishing the Financial Restructuring Fund (FRF) as a legal entity and enhancing the autonomy of the financial supervisory agency - Superintendency of Banking and Financial Institutions (SBEF), and the central bank. According to a World Bank (WB) 2006 report, Bolivia's Financial Markets and Pension Reform Technical Assistance Project (FMPRTA) intends to strengthen the institutional capacity of the SBEF so as to better regulate and supervise banking and financial activities in Bolivia. However, there is no publicly available information regarding Bolivia's compliance with the Core Principles for Effective Banking Supervision. More »

The enactment of Law No.1834 in 1998 provided both local and foreign investors with a legal framework for securities issuance and trading. Moreover, in January 1999, an Inter-American Development Bank/Multilateral Investment Fund project to consolidate and develop the securities market in Bolivia was approved. However, there is no publicly available information regarding Bolivia's compliance with the Objectives and Principles of Securities Regulation promulgated by the International Organization of Securities Commissions (IOSCO). More »

As of 1998, the Bolivian insurance market was undergoing a phase of modernization, following the approval of a new Insurance Law. The Insurance Law No. 1883 is the instrument that regulates the insurance activity and underwriter in Bolivia and determines which are the rights and duties of the insuring organizations. However, there is no publicly available information regarding Bolivia's compliance with the Insurance Core Principles (ICPs) promulgated by the International Association of Insurance Supervisors (IAIS). More »

Legend:

Credit Ratings

Moody's B3/Stable

Fitch B-/Stable

Standard & Poor's B-/Stable

Macroeconomic Data

2007 GDP (Current Prices): 13.192 billion USD (IMF)

2007 GDP (Per Capita): 1,342 USD (IMF)

2008 GDP (Growth Forecast): 4.7% (IMF)

2008 Inflation (CPI): 15.1% (IMF)

2007 Unemployment: 8% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 0.24 billion USD (UNCTAD)

FDI (Outward): 0.003 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): 581 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)