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  • Bolivia's President Evo Morales speaks during a news conference at the presidential residence in La Paz, Bolivia June 14, 2016.

    Bolivia's President Evo Morales speaks during a news conference at the presidential residence in La Paz, Bolivia June 14, 2016. | Photo: Reuters

Published 15 June 2016

The World Bank says Bolivia's economy is one of the strongest in Latin America. But why?

Bolivia may be one of Latin America’s poorest nations, but its prospects for growth are among the brightest in South America.

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A recent World Bank report confirmed what Bolivia’s socialist government has been talking up since the start of the year; it’s economy is bucking the trend and continuing to grow.

The World Bank increased its growth forecast in Bolivia for Gross Domestic Product to between 3.5 percent to 3.7 percent, placing it as one of the better performing economies in Latin America. World Bank representative in Bolivia, Nicola Pontara, says that "Bolivia has handled its economy well over the past decade."

Bolivia’s Economy Ministry proudly proclaimed that despite international agencies such as the World Bank and the International Monetary Fund downgrading growth projections for most Latin American economies "Bolivia continues in first place with the greatest growth in all of Latin America."

Economy Minister Luis Arce says Bolivia has weathered the storm "thanks to responsible management of the economy, in the framework of a social-economic model since 2006."

So what makes Bolivia, still South America’s poorest country on a per-capita GDP basis, different from its neighbors? According to economists the transformation occured when Evo Morales became president in 2006. "He set out his stall from the beginning with his brand of indigenous socialism," says economist Armando Ortuno.

Since Morales became President, GDP has almost tripled and the living standards of more than 2.5 million people have improved according to UDAPE, a Bolivian social and economic policy analysis think tank.

According to Bolivia’s Economy Ministry, between 2004 and 2014 the economy expanded an average 4.9 percent, allowing it build up impressive fiscal and current account surpluses. Bolivia is also South America’s second-largest producer of natural gas after Venezuela. In 2015, gas made up nearly half of Bolivian exports with combined gas and petroleum exports amounting to US$4.03 billion.

At an investment forum in London this week, Arce announced that Bolivia is hoping to sell a Eurobond of up to US$1 billion. "If the conditions are good it will be in the next months," Arce told journalists in a briefing during a Developing Markets Associates investment conference.

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"We have authorization for this, for US$1 billion this year," he said, adding he expected the bond to come with a 10-year maturity.

This would be the country's third international issue, and proceeds would go mainly towards investment in healthcare, specifically hospitals, he added.

Despite a sound economy and bright economic outlook Bolivia’s government is not resting on its laurels. The government is implementing a new strategy actively seeking investment from super-powers China and Russia. The IMF says from 2000-2015 China-Bolivia bilateral trade expanded by a factor of six, from US$75.3 million in 2000 to US$2.25 billion in 2014. According to Latin American economic and political analyst R. Evan Ellis "11 out of 49 public works (in Bolivia) outstanding in 2015 were awarded to Chinese companies."

In a recent interview with a Russian news agency, President Morales said "China and Russia know that we have stability in our economy and they want to invest, while the United States are standing against our brothers, hampering them, asking questions, keeping watch over the investments from China and Russia."

Signaling no change to the country’s economic model that has served the country well for the past decade, Morales claimed that Bolivia was free from "this dominion mentality" and expected to gain more than US$8 billion in investments this year.

Bolivia is now officially open to more Russian investments, loans and technologies. The hope in La Paz is that the strong economy and positive outlook for the future will attract billions of new dollars that will keep Bolivia’s economy buoyant and setting the pace as South America’s best performer for the next decade.

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