Chapter

BOLIVIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of April 30, 2004)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: June 5, 1967.
Exchange Arrangement
CurrencyThe currency of Bolivia is the boliviano.
Other legal tenderThe dollar is also legal tender.
Exchange rate structureUnitary.
Classification
Crawling pegThe official selling rate is determined daily by the Central Bank of Bolivia (CBB) at a daily competitive auction (“bolsín”). The Committee for Exchange and Monetary Policy (CEMP) makes recommendations to the president of the CBB on the amount of foreign exchange to be auctioned and a floor price below which the CBB will not accept any bids. This floor price, which is expressed in dollars, is the official exchange rate. The CEMP determines the difference between the selling rate and a buying rate, which is currently Bs 0.02. The private sector may participate in the auctions (with a minimum bid of $100,000 or the equivalent) through financial institutions that have accounts with the CBB.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsPayments between Bolivia and the other LAIA countries must be made through accounts maintained with each other by the CBB and the central banks of the countries concerned, within the framework of the multilateral clearing system of the LAIA.
Clearing agreementsYes.
Administration of controlThe CBB is in charge of operating the auction market for foreign exchange. The MOF, together with the CBB, is in charge of approving public sector purchases of foreign exchange for debt-service payments.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)Gold may be traded freely, subject to the following tax scale in accordance with the gross value of the sale of gold bullion: 7% for official quotations larger than $700 a troy ounce; between 4% and 7% for official quotations between $400 and $700 a troy ounce, calculated as a 0.01 factor multiplied by the official quotation; and 4% for official quotations of less than $400 a troy ounce.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for imports
Letters of creditLCs have to be opened at a bank in the Bolivian banking system.
Import licenses and other nontariff measures
Negative listCertain imports are controlled for reasons of public health or national security.
Import taxes and/or tariffsBolivia applies an import tariff of 10% on consumer goods. Tariffs of zero and 5% are applied to capital goods in accordance with approved lists. A zero rate is also applied to imports of books and printed materials. Donated food, including wheat, is exempt from the import tariff.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Preshipment inspectionEffective June 30, 2003, preshipment inspection is no longer required. Previously, exports were subject to official review. If necessary, exporters were able to contract with specialized agencies for verification.
Export licensesNo.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersIn accordance with Law 2646, effective April 1, 2004, a temporary tax was imposed on domestic or foreign transfers or remittances of funds through authorized financial institutions or money transfer agencies not involving a current or savings account. The tax rate is 0.3% for the first 12 months and 0.25% for the next 12 months.
Investment-related paymentsThere are no restrictions on payments for amortization of loans or depreciation of direct investments. A 25% income tax is applied to the taxable net profit, which is presumed to be 50% of the amount of profit remitted.
Prior approvalPublic sector purchases of foreign exchange for debt service must be approved by the MOF and the CBB.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operations
Commercial credits
To residents from nonresidentsAll foreign credits, including suppliers’ credits to government agencies and autonomous entities, and credits to the private sector with official guarantees are subject to prior authorization by the national congress, which is conducted by the MOF. All cash proceeds of borrowings from foreign public sector agencies are channeled through the CBB.
Financial credits
To residents from nonresidentsYes.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadFinancial institutions may make loans in the form of credits denominated in foreign currency for imports of capital goods and inputs for the exporting sector with resources from international financial institutions, foreign government agencies, or external lines of credit. All overseas credits of less than a one-year term are subject to reserve requirements, except for fully matched liabilities for foreign trade operations.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsA reserve requirement of 2% is applied to time deposits in domestic currency with a maturity of up to 60 days and in foreign currency with a maturity of up to 360 days.
Liquid asset requirementsA liquid asset requirement of 10% applies to time deposits in foreign exchange with a maturity of up to 720 days.
Open foreign exchange position limitsEffective July 8, 2003, the limit on short foreign exchange positions is 20% of the value of capital and reserves and 100% for losses on the indexed foreign currency and domestic currency portfolio; on January 1, 2004, this was reduced to 90%.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investors
Limits (max.) on investment portfolio held abroadThe maximum limit that pension fund administrators may invest abroad varies between 10% and 50% of each Individual Capitalization Fund. The specific limit within this range is decided by the CBB. Effective February 25, 2003, the CBB sets the annual limit—currently 10%—for investments by insurance companies in securities issued abroad.
Other controls imposed by securities lawsNo.
Changes During 2003
Exports and export proceedsJune 30. The preshipment inspection requirement was eliminated.
Capital transactions
Provisions specific to commercial banks and other credit institutionsJuly 8. The CBB set the limit on short foreign exchange positions at 20% of the value of capital and reserves and 100% of the provisions balance for losses on the indexed foreign currency and domestic currency portfolio.
Provisions specific to institutional investorsFebruary 25. The CBB began setting a maximum limit for investments abroad by insurance companies.
Changes During 2004
Payments for invisible transactions and current transfersApril 1. Law 2646 introduced a temporary tax on financial transactions at the rate of 0.3% and 0.25% for the first and second 12 months, respectively.
Capital transactions
Provisions specific to commercial banks and other credit institutionsJanuary 1. The foreign exchange position limit on provisions balance for losses on indexed foreign and domestic portfolios was reduced to 90% from 100%.

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