S&P Global Ratings revised its outlook on Bolivia to negative from stable as the country continues to grapple with political uncertainty since elections in October.
The uncertainty stemming from President Evo Morales' resignation and a subsequent change in leadership have weakened Bolivia's macroeconomic pillars, leading to higher government debt and potentially greater vulnerability to negative external shocks, the rating agency said. Persistent current account deficits over the years have drained Bolivia's once large external buffers, leaving limited scope for the current interim and next governments to implement corrective measures amid a polarized political situation and social tensions.
The negative outlook reflects at least one-in-three chance of a downgrade in the next six months to 18 months if continued political uncertainty weighs on the country's current account balance, weakening its external profile. Poor GDP growth prospects and a further deterioration of the government's fiscal metrics could also result in a downgrade, S&P Global Ratings said.
The rating agency affirmed Bolivia's long- and short-term foreign- and local-currency ratings at BB-/B, reflecting the country's weak governing public institutions and fiscal profile, low per-capita GDP, limited monetary flexibility and deteriorating external position and debt burden.
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