Bolivia to grow 5.3% in 2011, with an inflation index of more than 6.4%

These results stem from the upturn following the international financial crisis. External sales were buoyant, reflecting a rally in the average prices of Bolivia’s main exports and higher export volumes, especially in the case of natural gas.
The financial sector continued to grow with the domestic loan portfolio expanding by 15.7%. According to ECLAC estimates, economic activity will expand by approximately 5.3% in 2011.
Among the challenges facing the Government of Bolivia are the need to curb the rise in food prices and the inflation that these will trigger, maintain the competitiveness of the country’s main exports and boost the recovery of the mining sector.

Looming inflation
In April 2011, the government reached an agreement with the Bolivia Central Workers’ Union on an 11% rise for teachers and health workers. On 2 March 2011, it raised the public and private minimum wage by 20%. Following successive annual increments, the monthly minimum wage has gone up by 85.2% since 2006 and now stands at 815.4 bolivianos.

This policy, combined  with an important level of CCT (conditional cash transfers) that the populist government of Evo Morales takes ahead raise serious questions about the "healthy" state of the Bolivian economy.

Between nov and oct 2011 the price index in Bolivia raised in 0.32%, reaching and accumulated increase of 6.38% between January and November 2011.

According to the original plan of Bolivia's Central Bank, the inflation should not have reached more than 4%, however by November 2011 this rate is already 6.38%.

The International Monetary Fund (IMF) placed Bolivia among the countries with the highest inflation rates for 2011 for the region, the other countries in the list include Uruguay, Paraguay, Argentina and Venezuela with inflation rates of 7.7% to 25.8%

The problem grows bigger when we look at 2010s figures for Bolivia, which presented an inflation rate of more than 7%

Latin America produces less energy than Africa

Recently Bolivia, and most of the South American countries are suffering serious problems regarding energy.
Given this very challenging situation, I have recently got interested on the international statistics on energy production; there I found a very unpleasant surprise as a Latin American citizen: LAC countries produce less energy than Africa.

The following figures come from the IEA's (International Energy Agency) Key worlds statistics for 2011 (I am not aware of the statistics compilation for this specific sector, but the last figures in this 2011 booklet come from 2009).

As you can see, LAC countries in 1973 produced  3.5% of the World Total Primary Energy supply (Africa used to produce 3.4%), whereas in 2009 LAC countries produce 4.4% of TPEs and Africa has a 5.5% share.
This fact could be explained by the "boom" that North African countries had regarding oil supplies, however LAC countries have also important energy natural supplies such as natural gas and some oil. It would be interesting to dig into the reasons of why this happens.

Despite the reasons, the figures are clear, and I personally believe that the lack of serious investment in LAC contributes to the crippling in development of large scale energy projects in the region.

In a more localized note, is interesting to see that countries such as Brunnei or Angola have a greater energy production than Bolvia (I wonder now why my country is having so many energy supply problems)...

Is the west history?

CNN's perspective on the lack of leadership in global economy.. so is this the end of the West? will the future reside in emerging economies, BRICS and the re-borning of the South Asian tigers?

Do you think you can solve the Euro crisis?

I've found this very interesting game about the European Union's recent crisis, it is actually sponsored by the European Central Bank, you have to control some macroeocnomic variables and see if you achieve first a stabilized economy and then growth; there is even a world ranking, if you think you can solve the Euro crisis, this would be a very nice start

http://www.ecb.int/ecb/educational/economia/html/index.en.html

Enjoy!!!

Bolivia best environment for Microfinance... or not?

The Bolivian microfinance sector is characterized by the inclusion of some of the most recognized MFIs in the region. In recent years, a good deal of the efforts undertaken were focused on extending the application of the regulatory scheme to a larger number of institutions, a project that remains in progress.

The Superintendent of Banks and Financial Entities was the institution responsible for the regulation and supervision of the financial system in Bolivia since 1928. However, owing to the approval of the new constitution, its name was changed on May 7, 2009, to the Financial System Supervisory Authority (ASFI by its Spanish acronym). This change incorporated the functions of control and supervision of economic activities in the securities and insurance sectors.

 

According to the Law of Banks and Financial Entities, the regulated finance system is composed of intermediary financial banking entities (12) and non-bank intermediary financial entities such as private financial funds (5), open savings and loan cooperatives (25) and mutual savings and loans (8). Of these institutions, only three banks and four private financial funds are specialized in microfinancing. These are grouped into the Association of Financial Entities Specialized in Microfinance (ASOFIN by its Spanish abbreviation), while the private banks are grouped into the Association of Private Banks of Bolivia (ASOBAN by its Spanish abbreviation). The remaining Private Financing Fund (FFP by its Spanish acronym), FFP Fondo de la Comunidad, is focused on distributions to small businesses (MyPES) and individuals, and is the only regulated entity that is not part of ASOFIN.

The microfinance sector also includes Development Finance Institutions (DFIs) or non-governmental organizations, as well as the Social Savings and Loan Cooperatives (CACs by their Spanish acronym). Due to the development of this sector, the ASFI decided to incorporate these under the scope of supervision similar to private financial funds, but with a lower reserve requirement. To date, the figure is around USD 471,400, equivalent to 300,000 special drawing rights (DEG) as of September 11, 2011. The resolution for the DFIs was established in March 2008, while those for Social Savings and Loan Cooperatives (CACs) were established in June of that year. In accordance with the standards for authorization, the process of transformation for institutions of this type consists of two stages, in order to obtain the approval certificate and operating license. To date, there are 16 cooperatives and 9 DFIs that have obtained this approval certificate. They have been supported in this process by the granting of subsidiary lines of credit. The transformation of a private financial fund (FIE) into a bank, and the admission of a new open cooperative (La Merced) also contributed to the development of the sector.

Based on the previous explained developments and some others, Bolivia is ranked as No. 2 in The Economist's global index on business environment for microfinance among 55 countries. 

Bolivia, ranked No. 2 in global index on business environment for microfinance

The index -denominated Global Microscope on the Microfinance Business Enviornment- allows countries and regions to be compared across two broad categories: Regulatory Framework and Practices, which examines regulatory and market-entry conditions, and Supporting Institutional Framework, which assesses business practices and client interaction.

The Microscope was originally developed for countries in the Latin American and Caribbean region in 2007 and was expanded into a global study in 2009. Most of the research for this report, which included surveys, interviews and desk analysis, was conducted in the first half of 2011.

Peru ranekd atop the Global Microscope for a third straight year, buoyed by an excellent legal framework, sophisticated regulators and a government commitment to use microfi  nance to expand financial access to the poor. Peru deepened its strong foundations in the past year, with new rules to
improve financial soundness, and with a proposed law on mobile banking, among the first in Latin America. But even Peru was affected by the global stresses in microfinance, as levels of non-performing loans (NPLs) rose after some borrowers took on too much debt. Bolivia finished second in Microscope 2011, up from third a year earlier, helped by better price transparency and disclosure rules

 Despite this nice achievement for Bolivia's Microfinance market, there seems to be a little bit of contradiction when other indexes and rankings describing Microfinance institution's success are taken into consideration.

Not so fast...

For example in Forbe's ranking of Microfinance institutions the best Bolivian ranked institution is in place No. 42.

Forbes' first-ever list of the World's Top 50 Microfinance Institutions were chosen from a field of 641 micro-credit providers. The list was prepared by the Microfinance Information Exchange ( www.themix.org) under the direction of Forbes magazine. To qualify, the institutions must have made available their audited financials and must have passed review by a Forbes panel of advisers)

Rank	Name	Country	Scale	Efficiency	Risk	Returns
1	ASA	Bangladesh	14	83	56	40
2	Bandhan (Society and NBFC)	India	108	49	42	1
3	Banco do Nordeste	Brazil	46	27	213	25
4	Fundación Mundial de la Mujer Bucaramanga	Colombia	58	72	193	1
5	FONDEP Micro-Crédit	Morocco	119	26	196	1
6	Amhara Credit and Savings Institution	Ethiopia	56	126	118	42
7	Banco Compartamos, S.A., Institución de Banca Múltiple	Mexico	15	24	295	11
8	Association Al Amana for the Promotion of Micro-Enterprises Morocco	Morocco	17	212	133	1
9	Fundación Mundo Mujer Popayán	Colombia	53	181	141	1
10	Fundación WWB Colombia - Cali	Colombia	27	206	155	4
11	Consumer Credit Union 'Economic Partnership'	Russia	82	300	19	1
12	Fondation Banque Populaire pour le Micro-Credit	Morocco	59	126	219	1
13	Microcredit Foundation of India	India	75	142	7	185
14	EKI	Bosnia and Herzegovina	66	102	242	1
15	Saadhana Microfin Society	India	263	79	73	1
16	Jagorani Chakra Foundation	Bangladesh	136	176	128	1
17	Grameen Bank	Bangladesh	8	280	100	62
18	Partner	Bosnia and Herzegovina	64	169	230	1
19	Grameen Koota	India	209	106	156	1
20	Caja Municipal de Ahorro y Crédito de Cusco	Peru	48	99	222	119
21	Bangladesh Rural Advancement Committee	Bangladesh	10	159	126	205
22	AgroInvest	Serbia	84	195	222	1
23	Caja Municipal de Ahorro y Crédito de Trujillo	Peru	20	163	220	101
23	Sharada's Women's Association for Weaker Section	India	229	207	55	13
24	MIKROFIN Banja Luka	Bosnia and Herzegovina	60	240	205	1
25	Khan Bank (Agricultural Bank of Mongolia LLP)	Mongolia	19	149	280	59
26	INECO Bank	Armenia	96	173	202	39
27	Fondation Zakoura	Morocco	51	268	194	1
28	Dakahlya Businessmen's Association for Community Development	Egypt	200	215	102	1
29	Asmitha Microfin Ltd.	India	80	254	73	111
30	Credi Fe Desarrollo Microempresarial S.A.	Ecuador	28	252	206	34
31	Dedebit Credit and Savings Institution	Ethiopia	50	246	80	154
32	MI-BOSPO Tuzla	Bosnia and Herzegovina	128	120	283	1
33	Fundacion Para La Promocion y el Desarrollo	Nicaragua	173	89	171	100
34	Kashf Foundation	Pakistan	123	194	219	1
35	Shakti Foundation for Disadvantaged Women	Bangladesh	170	221	151	1
36	enda inter-arabe	Tunisia	198	90	257	1
37	Kazakhstan Loan Fund	Kazakhstan	120	118	320	1
38	Integrated Development Foundation	Bangladesh	300	134	140	1
39	Microcredit Organization Sunrise	Bosnia and Herzegovina	114	103	341	17
40	FINCA - ECU	Ecuador	125	138	264	54
41	Caja Municipal de Ahorro y Crédito de Arequipa	Peru	23	126	220	215
42	Crédito con Educación Rural	Bolivia	135	152	298	1
43	BESA Fund	Albania	109	135	345	1
44	SKS Microfinance Private Limited	India	61	395	141	1
45	Development and Employment Fund	Jordan	83	388	135	1
46	Programas para la Mujer - Peru	Peru	292	82	242	1
47	Kreditimi Rural i Kosoves LLC (formerly Rural Finance Project of Kosovo)	Kosovo	213	158	247	1
48	BURO, formerly BURO Tangail	Bangladesh	137	207	186	91
49	Opportunity Bank A.D. Podgorica	Serbia	49	234	319	23
50	Sanasa Development Bank	Sri Lanka	86	206	93	241

So what does this mean? Well, there certainly is a very nice environment for the development of MIF institutions in Bolivia, however aspects such as legal risk, oevercrowding of the market, lack of serious administration and others hamper the real potential of Bolivia's development of Microfinance.

Personally I hope that this changes in the near future, so Bolivia would be able to keep its predominant role in this specific sector.