Fitch Upgrades Bolivia's Credit Rating Amid Reduced Default Risk

Fitch Ratings has upgraded Bolivia’s long-term foreign-currency issuer default rating (IDR) to 'BB-' from 'BB', reflecting a notable reduction in credit risk. The upgrade follows a series of fiscal reforms and structural improvements in public finances, including a 15% decline in the general government deficit as a percentage of GDP in 2025. This performance marks a significant turnaround from previous years when the deficit exceeded 20% of GDP. The agency highlighted that Bolivia’s external debt-to-GDP ratio dropped to 38.4% in 2025, down from 44.1% in 2023. This improvement was driven by a combination of reduced borrowing, stronger export revenues—particularly from lithium and natural gas—and sustained debt servicing discipline. Fitch noted that Bolivia has maintained uninterrupted payments on its multilateral and bilateral obligations, with no overdue debt servicing since 2021. The positive outlook is also supported by a 2.6% increase in foreign exchange reserves, reaching $7.3 billion by end-2025. The central bank’s foreign exchange policy has helped stabilize the Bolivian boliviano, reducing inflation to 5.8% year-on-year in December 2025, down from 7.2% in the same period a year earlier. Market participants have responded favorably, with Bolivia’s 10-year sovereign bonds trading at yields of 8.9% as of January 2026—down from 10.4% in early 2024. Investors, particularly in Latin American emerging markets, are reassessing risk exposure, with several institutional funds increasing their allocations to Bolivian government paper.