ESG
Alternative finance
The announcement of sustainable bonds by the Banco de Desarrollo Productivo (BDP) in Bolivia is the result of months of work. "The process began under former President Janine Añez because there was great urgency to look for alternative sources of financing that go beyond the Administrators of Pension Funds (AFP) or international organisations," begins an executive at BDP.
"The Añez government, blocked by the opposition-controlled Legislative Assembly, could not access international loans because a law is required for this in Bolivia. These bonds were designed to get around this and bring in funds from private investors and multilateral organisations," continued the executive.
The solution was developed in partnership with the Bolivian Stock Exchange and the Japan International Cooperation Agency (JICA).
From the first negotiations, there was great support from organisations such as IDB Invest and IFC (World Bank), "[They] expressed their support and stated that if Bolivia succeeded in securing these bonds, then they would buy without hesitation," declared a former member of the BDP board.
The question is the position of the new Arce government, which is implementing a series of measures to eradicate everything done by the previous administration. Luis Arce, in his 13 years as Minister of Economy under Evo Morales, has made clear his animosity to private business and as a result the MAS implemented a very adverse business environment for foreign investment. "This is the real challenge," says a former member of the board of Banco Central de Bolivia (BCB), "We have to see if Arce can leave his ideology behind and be more open to promoting foreign direct investment."
"This is the real challenge, we have to see if Arce can leave his ideology behind and be more open to promoting foreign direct investment."
Former board member, Banco Central de Bolivia (BCB)
One BDP executive is optimistic, "These bonds will have good support, Ninette Denise Paz Bernardini is the new Chair of BDP and she has been on Luis Arce's trusted team for 13 years." A former BDP board member has a contrasting view, "Arce has no portfolio of sustainable projects, he isn't interested, there is no political will."
“These bonds will have good support, Ninette Denise Paz Bernardini is the new Chair of BDP and she has been on Luis Arce's trusted team for 13 years.”
Executive, Banco de Desarrollo Productivo
From an investors perspective, the environment for FDI isn't great. Bolivia's country risk rating has been downgraded and there was a recent debacle around lithium projects with a German firm.
The former BCB board member warns, "International reserves are at the minimum acceptable level and if the government does not find a way to increase them, it will have to devalue."
There is also a political risk that previous internal divisions within the governing MAS party resurface, "Arce is not being able to govern and it is clear that this is due to an internal fracture," believes the former member of the BDP board.
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