In August Standard & Poor’s (S&P), an international credit ratings agency, revised its outlook on Bolivia’s foreign- and local-currency ratings to positive and affirmed its 'B+' long-term and 'B' short-term foreign and local currency sovereign credit ratings for the country.
Critics of President Evo Morales dismissed the upgrade and suggest that the outlook for the economy is deteriorating as the commodity boom peters out. The government’s uncertain response to widespread protests by indigenous people against a new Brazilian-financed road, designed to improve Brazil’s communications to the Pacific, is another disconcerting sign. For the past six years, Morales has been the unquestioned dominant political force in the country.
S&P said that it had revised the outlook to “reflect the possibility of an upgrade if planned new investment in the mining and gas sectors leads to better economic growth prospects and further improvements in the country's already strong external indicators". The agency cited “a number of large infrastructure and investment projects […] announced over the last three months that could raise Bolivia's growth prospects and exports over the next three to five years”.
As well as new exploration agreements for the gas and lithium sectors, a key agreement cited was that announced in June between India’s Jindal Iron & Steel and the government, whereby the former would invest US$2.1bn in the El Mutún iron ore mine over the next eight years. The project is by far the biggest investment by any Indian company in South America.
Budget: On 6 September the senate approved an amendment to the 2011 budget (PGE), ratifying earlier changes by the chamber of deputies. The vote added Bol$3.27bn (US$457.21m) to budget expenditure, a quarter of which will go towards public works, including US$40m for the roads administration (ABC) for the upkeep of the so-called vital road links network (RVF).
Inflation: In August monthly inflation was 0.38%, brining the rate for the past 12 months to 10.4%.
