In recent years, Bolivia has financed its fiscal deficit mainly with domestic credit. According to official data, in 2023 one of the highest deficits was reached, 96% of which was financed by domestic credit, and the remaining 4% by external credit.
Furthermore, this domestic credit reached its peak in 2023 in at least the last five years, with Bs 32,680 million, 91% more than what was financed with domestic credit in 2022.
Economic analyst Germán Molina said that in recent years there has been a considerable increase in domestic debt to finance the fiscal deficit, which in turn could generate inflationary pressures.
“We are already seeing an increase in inflation in the price of basic products,” said Molina.
The government has announced a series of measures to mitigate inflation, which is also caused by external factors. Among the most notable are subsidies for certain foods and fuels, aspects that have, however, been complicated by the shortage of dollars.
At the same time, last year, the public sector paid the highest amount of domestic debt in recent years (Bs 2,302 million), but the trend was similar in terms of interest payments on foreign debt, which last year reached Bs 4,333 million, the highest amount in the last five years.
The 2023 deficit (the negative difference between what the public sector received in income and spent) reached Bs 34,147 million, almost 11% of GDP, somewhat less than the deficit in the year of the pandemic (2020), which reached 12.7% of GDP. Although in terms of nominal amounts, the 2023 deficit was even higher.
More spending on salaries
On the other hand, expenditures on “personal services,” which include salaries of public officials, reached Bs 43,047 million in 2023, the highest amount in the last five years. Since 2019, this item has increased by 16%.
Expenditures on goods and services in 2023, which reached Bs 54,539 million, are also among the highest in the last five years; although slightly lower than those of 2022 (3%).
