 2007 was a year of contrasts for the Bolivian economy, on the positive side there were record levels of exports and net international reserves combined with a reduction of 57% in the external debt. Furthermore for the thirdyear running there was a budget surplus and continued growth (4.2% in 2007). As a result of this situation the local currency revaluedagainst the US dollar for the second year running, in 2007 by 4.48%.
On the other hand inflation was double digit at 11.73%, the highest in the last 20 years. Amongst the reasons for this spike are i) the climatic effects caused by “El Niño”, ii) the dedollarizationof the economy and iii) the reduction of the levels of external investment.
The banking sector continued its recovery as demonstrated by an increase in deposits from the public in both local and foreign currency, andin the loan portfolio.
On the other hand, the level of foreign investment in the periodJanuary through September 2007 fell by 75% compared with the same period of the prior year.Finally, with the subscription of the contract between JindalSteel and Power and EmpresaSiderúrgicadel Mutún(ESM), it is estimated that the Indian company will invest an average of 260 millions of dollars in the next eight years.
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