Moody's slashes Bolivia

Moody's Ratings said it downgraded the government of Bolivia's long-term local- and foreign-currency issuer and senior unsecured debt ratings to Caa3 from Caa1 and changed the outlook to stable from negative.

“The downgrade of the ratings reflects Moody's assessment that ongoing governance challenges and heightened domestic political risk have exacerbated external liquidity pressures to critical levels as a result of a persistent decline in foreign-exchange reserves which threaten a balance of payments crisis.

“Congressional approval of a new Gold Law provided temporary liquidity relief in 2023 allowing the central bank to convert a portion of its large gold holdings into liquid foreign-exchange reserves, but the level of reserves has continued to decline and the legal limit on central bank gold sales has nearly been reached,” the agency said in a press release.

The improved outlook reflects the view that Bolivia’s upside and downside risks are balanced, Moody’s noted.

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