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Bolivia: La Inversión para la Construcción del Vivir Bien

July 12, 2007


Providing a forum to connect government officials and private sector leaders, the Americas Society and Council of the Americas (AS/COA) held our first Latin American Cities Conference in La Paz, Bolivia. The conference, hosted in association with the Ministry of Foreign Affairs and Worship, examined the country’s investment climate. With over 200 private and public sector leaders in attendance, speakers discussed the importance of investment for Bolivia’s development and sustained economic growth.

The La Paz Conference featured several keynote speakers along with three panels. Keynote speakers included:

  • Álvaro García Linera, Vice President of Bolivia
  • David Choquehuanca Céspedes, Minister of Foreign Affairs and Worship
  • Carlos Villegas, Minister of Hydrocarbons
  • Luis Alberto Arce Catacora, Minister of Finance
  • Walter Delgadillo, Minister of Labor
  • José Carrera, Director, Corporación Andina de Fomento (CAF), Bolivia

Conference panelists included:

  • Lisa Schineller, Director, Sovereign Ratings Department,Standard & Poor’s 
  • Nelson Cuentas, General Manager, Microsoft Bolivia
  • Eduardo Nanni, General Manager, Cargill Bolivia S.A.  
  • Javier Hurtado, President, Irupana
  • Ricardo Srebernic, President, Empresa Petrolera Chaco S.A.
  • Carlos Ormachea, Vice President, Energy Division, Tecpetrol

The La Paz City Conference is part of the AS/COA’s signature 2007 Latin American Cities Conferences. This summary provides an overview of the main themes addressed during the conference.


The Latin American Cities Conference was created by AS/COA to unite high-ranking government officials, prominent business leaders, policymakers, academics, and other noteworthy guests to discuss economic analysis and projections, political trends, opportunities for growth and investment, regional integration, energy, and other relevant issues for the region. This year, the Cities Conferences expanded to include Bolivia, where AS/COA offered the government and the private sector common ground for dialogue.


The La Paz City Conference focused on Bolivia’s macroeconomic situation, hydrocarbon and energy policy and the investment outlook. In bringing together key government ministers and private sector analysts, AS/COA created a space for discussion between the government and the private sector. Speakers analyzed the country’s economic situation and government plans for foreign and domestic investment.  


Bolivian Vice President Alvaro García Linera identified foreign direct investment (FDI) as a central component of Bolivia’s economic growth. In his keynote speech, García said, “The Bolivian government needs and recognizes the importance of foreign direct investment to complement Bolivia’s economic development in different sectors of the economy.”

David Choquehuanca, the foreign minister, joined the vice president in emphasizing the need for foreign and domestic investment. In response to critics’ assertions that the government had failed to ensure a stable environment for investments, both officials pledged that the Bolivian government would do as much as possible to provide clear contract terms and a stable atmosphere for business development.

Macroeconomic Situation

Bolivia’s macroeconomic stability plays an indispensable role in providing a safer climate for foreign investment, according to analysts. The country’s economic indicators point to improvements in most areas of the economy. Gross domestic product (GDP) growth has steadily increased over the last eight years, from a mere 0.4 percent in 1999 to 4.6 percent in 2006. The banking sector reported that savings soared $400 million from 2005 reaching $3.7 billion in 2006. The Minister of Finance, Luis Alberto Arce Catacora, also noted that savings had increased in every province of the country.
Other indicators indicate impressive economic strides in Bolivia. Exports totaled $4.1 billion, which contributed to Bolivia’s two-fold trade surplus jump from 2004 to 2006—last year, the trade surplus reached $1.3 billion. In only two years, the country’s international reserves reached a historic $3.9 billion.  Bolivia continues trying to attract foreign investment, which hovered in a negative red zone in 2005. Last year, foreign direct investment (FDI) totaled $237 million. For the first time in over 30 years, Bolivia enjoyed a fiscal surplus of 4.6 percent of GDP last year. Tax collection has seen unprecedented growth, taking in $290 million in 2006.
Bolivia’s current economic outlook appears rosy, but measures must be taken to sustain growth. According to Lisa Schineller, international support such as debt relief, along with Bolivia’s abundance of natural resources have served to bolster the economy. She pointed to a reassuring trend of low inflation in the country’s recent history. 
Yet Schineller also warned against Bolivia’s inflexible fiscal policy as well as its dependency on commodities. Together, these factors increase the economy’s risk to global market fluctuations. The growth outlook for Bolivia’s economy ranks slightly lower than its Andean neighbors. However, in spite of low investment levels, it has remained afloat thanks to a relatively strong global economy.

Hydrocarbons and Energy Policy

The hydrocarbons sector, the main pillar of the Bolivian economy, is the biggest contributor to GDP and the country’s main export. With over 48 trillion cubic feet of natural gas reserves, Bolivia stands out as one of the primary gas suppliers on the continent.

Bolivia’s enormous potential as an energy exporter and regional provider was recognized by all conference speakers. Natural gas is an increasingly essential source of energy. The use of natural gas to generate electricity in the region increased from 22 percent in 1971 to 38 percent in 2006. Given new energy dynamics, Bolivia has a central role to play in energy integration projects.  

Speakers agreed the state should be more active in promoting investment in exploration and production, consolidating rules and clarifying terms for contracts, and approving new development projects with greater efficiency. According to Carlos Ormachea, if Bolivia wants to keep its energy commitments to Brazil and Argentina, it must attract more investment—approximately $5 billion will be required between now and 2013.

In reference to hydrocarbon company nationalizations, Ricardo Srebernic noted that his company accepted the new terms of the contracts. Empresa Petrolera Chaco S.A. wants to work together with the government and state-owned Yacimientos Petroliferos Fiscales Bolivianos. “We want to be reliable partners, capable of producing the results that Bolivia and our company need,” he said.