Banking & Finance 2026 Comparisons

Bolivia’s loan market has been shaped less by cyclical monetary policy than by a structural foreign-currency shortage that has built up over the past several years, driven by declining natural gas exports and dwindling international reserves. This scarcity has pushed a significant amount of lending activity towards informal or parallel-market dollar financing, while regulated banks have faced increasing restrictions on foreign-currency operations, including reduced legal reserve requirements redirected towards a productive-lending facility.

The June 2026 shift from a 15-year fixed exchange rate to a flexible regime, combined with Bolivia’s first multi-year IMF programme since 2006 (a USD1.9 billion, 36-month arrangement approved in September 2026), is beginning to reshape the market. Lenders are recalibrating currency-risk pricing, and the government's broader reform agenda is expected to gradually restore access to cheaper external financing, although banks remain cautious given continued fiscal and reserve pressures.

Global conflicts have had a mostly indirect effect on Bolivia's loan market, principally through commodity price volatility (affecting hydrocarbons and mineral exports) and disruptions to global supply chains and shipping costs. Bolivia is not a major destination for international syndicated lending, so geopolitical shocks tend to be transmitted through the sovereign’s terms of trade and reserve position rather than through direct exposure of local banks to affected counterparties.

More significant for local lenders has been the domestic political and social unrest of 2026 (driven by fuel subsidy removal and the broader fiscal adjustment), which has had a more direct dampening effect on credit demand and risk appetite than any single external conflict.

Bolivia does not have a developed high-yield bond market; corporate debt issuance is concentrated in the local stock exchange (Bolsa Boliviana de Valores) and is dominated by investment-grade issuers, mainly banks and larger corporates, rather than sub-investment-grade or leveraged issuers. Most higher-risk financing needs are met through direct bank lending rather than public high-yield instruments.

The emerging carbon-credit and green-bond framework currently being debated in Congress (see 8. Project Finance and the accompanying Trends & Developments article) could, if enacted, create room for new types of thematic bond issuance, but this remains prospective rather than an established feature of the market.

Alternative credit providers remain limited in Bolivia relative to more developed regional markets, although this is changing. Financial technology companies now operate under a dedicated legal framework created by Supreme Decree No 5384/2025, and virtual asset service providers must register with Bolivia’s Financial System Supervisory Authority (ASFI) under Resolution No 540/2025, opening the door to fintech-led lending and payment products alongside traditional banks.

Savings and credit co-operatives and microfinance institutions continue to play an important role in rural and lower-income lending, a legacy of Bolivia’s historically strong microfinance sector, but institutional alternative lenders (private credit funds, direct lending vehicles) are not yet a significant feature of the market.

Sophisticated structures such as HoldCo financings, payment-in-kind (PIK) instruments and preferred equity remain uncommon in the Bolivian market, which is still dominated by conventional secured bank lending, trade finance and leasing. Structuring innovation in Bolivia has instead tended to focus on non-conventional collateral (see 5.1 Assets and Forms of Security), designed to extend credit to productive and rural borrowers who lack traditional real estate or registrable assets.

Looking forward, the opening of the mining sector to private capital and the possible development of a carbon-credit market could introduce more complex project-level structuring, including co-financing between multilaterals and commercial banks, over the medium term.

ESG-linked lending is at an early stage in Bolivia but is gaining regulatory attention, particularly around the country's emerging carbon-credit and climate-finance framework. Following the 2024 Constitutional Court ruling that lifted the prior prohibition on carbon-market mechanisms, two bills are currently before Congress: one creating a national emissions trading system, and a broader bill addressing green bonds, biodiversity credits and debt-for-nature swaps.

To date, sustainability-linked lending has been most visible in agriculture, forestry and hydrocarbons-adjacent sectors, where non-conventional collateral and climate-related financing needs intersect. If the pending legislation is enacted, banks are likely to see growing demand for green bond issuance and carbon-project financing advisory work.

Under Law No 393 (Ley de Servicios Financieros), financial intermediation is a matter of public interest, and only entities licensed by the ASFI may engage in the habitual, mass-market extension of credit within Bolivia. Licensed entities include banks, savings and credit co-operatives, and other regulated financial intermediaries, each subject to specific capital, governance and prudential requirements set by ASFI and the Central Bank of Bolivia (BCB).

A one-off or non-habitual loan by a foreign or domestic non-bank lender to a Bolivian company is not, in itself, treated as regulated financial intermediation, and does not generally require ASFI authorisation, provided the lender does not engage in this activity on a recurring, public basis within Bolivia. Cross-border loans from foreign banks to Bolivian borrowers are common on this basis, although the specific facts of each transaction (frequency, marketing within Bolivia, use of local agents) should be reviewed to confirm that the activity does not cross into regulated intermediation.

Foreign lenders are not generally prohibited from extending credit to Bolivian borrowers, and cross-border lending is a well-established practice, particularly for larger corporates and, increasingly, for multilateral-backed financing. As noted in 2.1 Providing Financing to a Company, the principal constraint is not a prohibition but the distinction between isolated cross-border loans (generally permitted without local licensing) and habitual financial intermediation within Bolivia (which requires ASFI authorisation).

Foreign-currency exchange control considerations and registration formalities for statistical and tax purposes are the main practical points foreign lenders need to navigate, rather than an outright restriction on lending itself.

Foreign lenders can generally hold security over assets located in Bolivia, subject to the same registration and perfection formalities that apply to domestic lenders. The principal restriction to flag is constitutional rather than purely regulatory: Article 263 of the Bolivian Constitution prohibits foreigners, whether individuals or through companies, from acquiring or possessing land, water or subsoil rights within 50 kilometres of Bolivia’s international borders, except in cases of state necessity declared by a two-thirds vote of the Legislative Assembly.

This border restriction is relevant to security packages involving real estate mortgages in border regions and should be checked early in any transaction involving Bolivian real property, particularly in departments bordering Brazil, Argentina, Chile, Peru or Paraguay.

Foreign currency exchange has become a significantly more active area of regulatory attention following Bolivia’s June 2026 shift from a 15-year fixed exchange rate to a flexible regime (see the accompanying Trends & Developments article for full detail). The BCB now sets a daily reference rate based on the weighted average of banks’ dollar-purchase transactions, and has, at points, intervened directly in the market, including through a temporary suspension of new dollar-purchase operations in September 2026.

For lenders and borrowers, this means that foreign-currency contracts require careful attention to the exchange rate mechanism applicable and the time at which it applies, particularly given a July 2026 Supreme Court ruling (Auto Supremo No 0584/2026) confirming that the applicable rate for converting a dollar obligation into bolivianos is the rate in force on the obligation’s due date, rather than on the date of payment or judgment. Restrictions on access to physical dollars for deposit withdrawals, which had been in place for roughly two years before the reform, are also being unwound gradually, but have not yet been fully resolved.

There is no general statutory restriction on how a Bolivian borrower may use loan proceeds, and use-of-proceeds provisions in Bolivian financing agreements are typically a matter of contractual negotiation between lender and borrower rather than a matter of law. Sector-specific rules can, however, apply indirectly; for example, financing tied to natural resource extraction, mining or hydrocarbons activities must be consistent with sector licensing and, where applicable, state participation requirements.

Bolivia recognises the fideicomiso (trust) as a regulated financial service under Law No 393, which may be provided only by authorised financial intermediaries acting as fiduciaries, rather than as a freestanding common-law-style trust structure available to any party. The agency concept in syndicated lending is generally implemented contractually, through an administrative or facility agent appointed under the credit agreement, rather than through a distinct statutory agency regime; as a civil law jurisdiction, Bolivia relies on contractual mandate (mandato) principles to underpin the agent’s authority to act on behalf of the lender group.

As an alternative to agency or trust structures, Bolivian transactions sometimes use direct multi-lender arrangements or a lead-bank structure where one institution holds security on behalf of the syndicate under a security-sharing agreement, given the more limited institutional familiarity with formal agency and trust concepts outside the regulated fiduciary sector.

Loan transfers in Bolivia are generally implemented through cesión de créditos (assignment of receivables) under the Civil and Commercial Codes, which requires notice to, or acknowledgment by, the debtor to be effective against the debtor, and registration formalities where the underlying security is itself subject to a public registry (such as a mortgage or non-possessory pledge recorded with the Registro de Derechos Reales). Novation is also used where the parties prefer to substitute the lender entirely rather than merely assign the existing claim.

Where the loan benefits from registered security, the assignment of that security typically requires a corresponding registration update to preserve its priority and enforceability against third parties, which can add time and cost to loan trading compared to jurisdictions with more streamlined syndicated-loan transfer regimes.

Debt buyback by a borrower or sponsor is not prohibited as a general matter of Bolivian law, and is typically governed by the terms of the underlying credit agreement rather than by a specific statutory regime. Regulated financial intermediaries repurchasing their own issued debt instruments would additionally need to observe any applicable ASFI prudential requirements relating to their own funding instruments.

Bolivia does not have a developed public-company takeover regime comparable to those in jurisdictions with an active listed-equity market, and “certain funds” provisions common in competitive public M&A financings are not a standard feature of the local market, given the small number of widely held public companies. Acquisition financing in Bolivia is more commonly structured for private company transactions, using short-form facility agreements modelled on international precedents but adapted to local security and enforcement mechanics. There is limited public filing of acquisition finance documentation and no significant body of recent case law specific to certain-funds provisions in Bolivia.

The most significant recent development affecting financing documentation is undoubtedly the June 2026 exchange rate reform and its aftermath. Contracts referencing the “official exchange rate” now need to expressly specify which mechanism applies, and the Supreme Court’s ruling on the due-date convention for foreign-currency conversion (see 3.3 Restrictions and Controls on Foreign Currency Exchange) should be reflected in payment and default provisions in new facility agreements.

Separately, the emerging virtual-asset regulatory framework (BCB Resolution No 082/2024, Supreme Decree No 5384/2025, ASFI Resolution No 540/2025) and Bolivia’s placement on the Financial Action Task Force (FATF) and EU AML grey/high-risk lists have both increased the compliance representations, undertakings and due diligence provisions that lenders are now including in Bolivian facility agreements, particularly for cross-border transactions involving EU-regulated lenders.

Bolivia’s Civil Code imposes a fixed statutory usury ceiling for ordinary civil lending: Article 409 caps conventional interest at 3% per month, and Article 414 provides that any higher rate is automatically reduced to this ceiling by operation of law. Article 413 further classifies interest above this maximum, as well as any capitalisation of interest (anatocismo, prohibited under Article 412), as usury, triggering an obligation to make restitution and criminal liability under the Penal Code.

Article 415 of the Civil Code, together with Article 1333 of the Commercial Code, carves out interés bancario from this general ceiling, authorising separate regulation for interest charged by regulated financial intermediaries. In practice, banks and other ASFI-regulated entities calculate effective annual rates under the methodology set by the BCB pursuant to Law No 393, rather than being bound by the flat 3%-per-month civil cap.

Private, non-regulated lending between commercial parties (for example, shareholder loans or intercompany financing) remains subject to the 3%-per-month ceiling, a point worth flagging to lenders structuring financing outside the regulated banking system. Where no interest rate has been agreed, Article 414 sets a default legal interest rate of 6% per year, applicable from the date of default.

Regulated financial intermediaries are subject to disclosure obligations under Law No 393 and ASFI regulations regarding contract terms, effective interest rates and fees, aimed principally at protecting the “financial consumer” (mostly individuals and smaller borrowers) rather than imposing broad public disclosure obligations on private commercial financing contracts between sophisticated parties. There is no general public filing requirement for privately negotiated corporate loan agreements, in contrast to jurisdictions with public loan or securities registries for corporate debt.

Interest, together with dividends, fees and other Bolivian-source income paid or remitted to a beneficiary outside Bolivia, is generally subject to the Impuesto sobre las Utilidades de las Empresas – Beneficiarios del Exterior (IUE-BE), at an effective rate of 12.5% of the gross amount remitted (calculated as 25% of a statutorily presumed 50% net profit margin). The Bolivian payer acts as the withholding agent and is responsible for remitting the tax to the tax authority.

Beyond the IUE-BE withholding on cross-border payments, lenders should be aware of:

• value-added tax (IVA) and transaction tax (IT) considerations that can apply to certain fee income earned by regulated Bolivian entities;
• notarial and registration fees payable on the formalisation and registration of mortgages and non-possessory pledges; and
• stamp-type charges that can apply to specific public-registry filings.

Bolivia's tax system also applies transfer-pricing documentation requirements to related-party cross-border financing above certain thresholds, broadly aligned with OECD principles.

The main tax friction for foreign or non-money-centre bank lenders is the 12.5% effective IUE-BE withholding on interest, which is not reduced by a broad double tax treaty network, as Bolivia’s tax treaty coverage remains relatively limited compared with other Latin American jurisdictions. Where a relevant treaty or, for Andean Community lenders, Decision 578 does apply, its relief provisions should be checked carefully, and it is common for gross-up clauses to be negotiated into facility agreements so that the borrower bears the economic cost of Bolivian withholding tax, mitigating (though not eliminating) the practical friction for foreign lenders.

The principal forms of security in Bolivia are the hipoteca (mortgage) over real property and the prenda (pledge) over movable assets, which can be either prenda con desplazamiento (possessory) or prenda sin desplazamiento (non-possessory, typically used for machinery, inventory and other registrable movable assets). Both mortgages and non-possessory pledges must be formalised by public deed and registered with the Registro de Derechos Reales to be effective and enforceable against third parties.

In the case of a mortgage over real property, registration with Derechos Reales typically takes between one and three months to complete, depending on the relevant registry office’s workload, and the registration fee is approximately 0.4% of the guaranteed amount or the value of the property offered as collateral. Lenders should factor this timeline and cost into transaction planning, particularly where the mortgage is a condition precedent to disbursement.

Bolivia also recognises a range of “non-conventional” guarantees under sector-specific regulation (Supreme Decree No 3722 and related rules), including guarantee funds, agricultural insurance, warehouse receipts, future export sale contracts, livestock guarantees and registered intellectual property, reflecting a policy effort to extend credit access to productive and rural borrowers who may lack traditional real estate collateral.

Bolivian law, as a civil law jurisdiction, does not recognise a common-law-style floating charge or a single universal security interest automatically attaching to all present and future assets of a company. Security must generally be granted over specifically identified and identifiable assets, meaning that a comprehensive security package over a Bolivian company’s asset base typically requires a combination of individual mortgages, pledges and, where applicable, the non-conventional guarantee mechanisms referred to above, rather than a single all-asset instrument.

Downstream, upstream and cross-stream guarantees are generally permitted under Bolivian law, subject to compliance with corporate benefit and fiduciary duty principles under the Commercial Code, which require that a guarantee be within the guarantor’s corporate purpose and not be granted in a manner that is manifestly detrimental to the guarantor or its minority shareholders. In practice, adequate credit support for upstream and cross-stream guarantees is typically addressed through corporate approvals evidencing shareholder consent and, where relevant, intercompany arrangements documenting the guarantor's economic benefit from the financing.

Bolivian law does not contain a specific, well-developed financial assistance prohibition comparable to those found in some European jurisdictions restricting a target company from guaranteeing or securing debt incurred to acquire its own shares. That said, general corporate law principles requiring a valid corporate purpose and arm’s-length dealing, together with directors’ duties to the company, mean that such structures should still be carefully documented and approved at the corporate level to withstand potential challenge, particularly where minority shareholders are affected.

There is no works-council-style consultation requirement analogous to those in some European jurisdictions, but the grant of security or guarantees by a Bolivian company will typically require formal corporate approval by the board and, depending on the company’s bylaws and the transaction’s materiality, its shareholders. Where the borrower or guarantor is a regulated entity, or where the transaction involves land within the 50-kilometre border security zone, additional consents or restrictions may apply and should be checked early in the transaction.

Mortgages and non-possessory pledges are released by executing a public deed of cancellation, which is then filed with the Registro de Derechos Reales to cancel the corresponding registration entry. Possessory pledges are released simply by the return of the pledged asset to the pledgor, reflecting the more informal nature of that form of security compared with the registered forms.

Priority among competing security interests in Bolivia is generally determined by the order of registration at the relevant public registry, following the well-established civil law principle of “first in time, first in right” for registered security. Contractual subordination between lenders is generally recognised and can be used to vary priority as between members of a lending group, but its effectiveness in an insolvency scenario depends on how it interacts with the statutory priority rules discussed in 7.2 Waterfall of Payments, particularly the preferential treatment given to labour and tax claims, which subordination agreements between commercial creditors cannot displace.

The most significant liens that arise by operation of law and can prime a lender’s contractual security are labour claims (salaries, severance and related employee entitlements) and tax claims, both of which typically enjoy statutory preference over ordinary secured creditors in an insolvency or enforcement scenario under Bolivian law. Lenders commonly address this risk through enhanced financial and information covenants designed to provide early warning of labour or tax arrears, rather than through a structural mechanism that can fully displace these statutory preferences.

A secured lender may generally enforce its collateral following a payment default or another enforcement event defined in the relevant security document, principally through judicial foreclosure proceedings before the ordinary civil courts, given that Bolivia does not have a widely used streamlined extrajudicial enforcement mechanism comparable to those in some other jurisdictions. Judicial enforcement of mortgages and pledges can be a lengthy process, and lenders should factor realistic timelines into their credit and recovery assumptions rather than relying on rapid extrajudicial recovery.

For financing transactions between private parties, Bolivian courts will generally recognise and uphold a contractual choice of foreign governing law and submission to a foreign jurisdiction, subject to Bolivian public policy and mandatory local law considerations (for example, security over Bolivian-situs assets will still need to comply with local perfection formalities regardless of the contract's chosen governing law). A waiver of immunity by a private commercial borrower is generally effective on this basis.

This position changes materially, however, where the counterparty is the Bolivian State or a state-owned entity. Article 320.II of the Constitution prohibits invoking any exceptional situation, diplomatic claim, or foreign jurisdiction against Bolivian sovereignty, a provision that formed the legal basis for Bolivia’s withdrawal from the ICSID Convention in 2007. Article 366 goes further for the hydrocarbons sector specifically, providing that foreign companies operating within the hydrocarbons chain on the State’s behalf are subject to Bolivian sovereignty, laws and authorities, with no exception permitting recourse to international arbitration or foreign jurisdiction. Lenders and investors financing projects or transactions involving the State or state-owned entities in strategic sectors should treat this as a structural constraint rather than a negotiable point, and should not assume that standard international financing boilerplate on governing law and jurisdiction will be enforceable in that context.

For financing between private parties, foreign arbitral awards are recognised and enforced in Bolivia under Law No 708 (Ley de Conciliación y Arbitraje), which directs the Supreme Court of Justice to apply the most favourable applicable international instrument, in practice most often the 1958 New York Convention, to which Bolivia is a party. Recognition proceedings do not involve a retrial of the merits, although the Supreme Court will review the award against the limited grounds for refusal set out in the Convention and in Law No 708 itself.

This framework should not be confused with investor-State arbitration under investment protection treaties, which operates under a materially different and more restrictive regime in Bolivia. Following its 2007 withdrawal from ICSID, and given the constitutional restrictions described in 6.2 Foreign Law and Jurisdiction, Bolivia does not generally submit to international investment arbitration, and any such recourse against the State would need to be based on a treaty or instrument that survived that withdrawal, assessed on a case-by-case basis. Private commercial financing disputes between non-state parties are unaffected by this restriction and continue to benefit from the more conventional enforcement regime described above. Foreign court judgments (as opposed to arbitral awards) are separately enforced under Bolivia’s civil procedural rules on international judicial co-operation, generally through an exequatur-style recognition process before the Supreme Court, and, absent a bilateral treaty with the relevant foreign jurisdiction, on the basis of reciprocity.

Beyond the substantive enforcement mechanics discussed in 6.3 Foreign Court Judgments and Arbitral Awards, foreign lenders should be attentive to the practical realities of litigating or arbitrating against Bolivian counterparties, including the length of judicial proceedings and the border-zone land restriction discussed in 3.2 Restrictions on Foreign Lenders Receiving Security. Where the borrower or a project counterparty is the State or a state-owned entity, the constitutional restrictions on international arbitration and foreign jurisdiction described in 6.2 Foreign Law and Jurisdiction and 6.3 Foreign Court Judgments and Arbitral Awards should be factored into the transaction’s dispute resolution strategy from the outset, rather than addressed only if a dispute arises. Bolivia’s current FATF grey-list and EU high-risk-country status (see the accompanying Trends & Developments article) can also affect correspondent banking relationships relevant to the practical transfer of enforcement proceeds.

Bolivian insolvency proceedings are governed principally by the Commercial Code (Decreto Ley No 14379 of 1977), Title II, Del Concurso Preventivo y Quiebra (Articles 1487 et seq), covering both concurso preventivo (preventive composition) and quiebra (bankruptcy). Once either is declared by the competent juez de partido, individual creditor enforcement is generally brought within the collective process rather than pursued separately.

Secured creditors retain their priority within that process, but Article 1487 conditions access to the composition procedure on the debtor not having been declared bankrupt in the preceding ten years, not having used a prior concurso within three years, and being current with its registry and accounting obligations. Law No 2495 (2003) separately introduced a Voluntary Restructuring and Liquidation regime, which applies preferentially in this area alongside the 1977 mechanism.

Article 1493 of the Commercial Code provides that neither a concurso preventivo nor a quiebra affects employees’ claims for accrued wages, severance payments or other social benefits arising under Bolivian labour legislation. Such claims must be paid with priority from the proceeds of the business’s operation or liquidation.

The same provision preserves tax claims outstanding at the time the composition or bankruptcy is declared. These claims are likewise paid in accordance with their statutory priority, ahead of both secured and unsecured creditors.

Only after the applicable labour and tax preferences have been satisfied do secured creditors rank ahead of unsecured creditors.

Proceedings before the Bolivian civil and commercial courts can be relatively lengthy, particularly in complex or contested debt-recovery matters. The World Bank estimated that enforcing a commercial contract in Bolivia took approximately 591 calendar days, including around 40 days for filing and service, 401 days for trial and judgment, and a further 150 days for enforcement of the judgment.

These figures provide a general indication of the time that commercial proceedings may take in Bolivia. They should not be understood as a fixed timeframe for every debt-recovery case, as the World Bank’s estimate was based on a standardised commercial dispute and does not necessarily reflect straightforward debt-collection proceedings.

The concurso preventivo under Articles 1487 et seq of the Commercial Code is itself designed as a rescue mechanism, allowing a merchant or company in cesación de pagos to reach a court-supervised agreement with creditors before quiebra is declared, rather than functioning purely as a precursor to liquidation. The convenio that emerges from this process can take several forms under the Code, including a simple wait or grace period, a partial condonation of debt, the incorporation of a new company jointly with creditors, a broader corporate reorganisation, an assignment of assets to creditors, or the appointment of a síndico to administer the business on a temporary basis while the agreement is implemented. Approval of the proposed convenio requires the support of a qualified majority of creditors by both number and value of recognised claims; if that majority is not achieved, the Code directs that quiebra must be declared, which underscores why timely, well-prepared negotiations with the principal creditor group are critical to the success of this route.

Alongside this 1977 mechanism, Law No 2495 of 2003 introduced a more modern Voluntary Restructuring and Voluntary Liquidation regime, which Article 31 of that law expressly states applies preferentially over other provisions in this area. This framework was designed to offer companies a more flexible, negotiation-driven alternative to the older Commercial Code procedure, although it has seen more limited use in practice than informal, purely contractual restructuring. In practice, many distressed Bolivian companies and their lenders still prefer to negotiate amendments, standstills, or debt rescheduling directly and informally, outside either statutory framework, given the relative unfamiliarity of local courts and practitioners with complex multi-creditor formal restructurings, and the greater speed and confidentiality that a private, consensual arrangement can offer compared with a public court process.

The most significant risk for a secured lender in a Bolivian insolvency scenario is the statutory subordination of its claim behind workers’ wage, severance and social-benefit claims and behind tax claims, both of which rank ahead of secured creditors under Article 1493 of the Commercial Code, regardless of how well the lender’s security has been structured or perfected. This is a structural feature of Bolivian law that cannot be contracted around, and it means that due diligence on a borrower’s labour and tax compliance history is at least as important to a lender's recovery analysis as the nominal value of the collateral package itself; a borrower with significant unpaid payroll or tax liabilities may leave far less enforceable value for secured creditors than the headline collateral value would suggest.

A second risk area is the length and unpredictability of the insolvency timeline itself. Because the governing framework dates from 1977 and Bolivia’s judicial and administrative infrastructure for complex, multi-party proceedings remains comparatively limited, lenders should build conservative assumptions into their credit models regarding both the time to any recovery and the discount that a lengthy process is likely to impose on ultimate proceeds. A related, third risk is the relative scarcity of local precedent and specialised judicial experience in handling large or cross-border restructurings, which can make outcomes harder to predict than in jurisdictions with a more developed and frequently tested insolvency practice. This argues in favour of proactive covenant monitoring, early-warning financial triggers, and prompt engagement with a borrower showing signs of financial distress, rather than relying on the formal insolvency process to protect the lender’s position after the fact.

Project finance activity in Bolivia has historically been concentrated in the hydrocarbons sector, which for decades was the country’s principal source of export revenue and fiscal income. This sector is governed by Law No 3058 (Ley de Hidrocarburos, 2005), which reaffirmed the State’s ownership of hydrocarbon reserves and channels private and foreign participation into the sector through contracts and joint arrangements with the state oil company, YPFB, rather than through direct private ownership of the resource in the ground.

As gas production and exports have declined structurally over recent years, activity has increasingly shifted towards mining and, in particular, lithium, where the state lithium company, YLB, has led development and has to date financed much of its activity through state-to-state agreements with Chinese and Russian partners rather than through commercial project finance. Outside the extractive sectors, infrastructure financing (roads, energy transmission and similar assets) has relied heavily on multilateral development banks such as the Inter-American Development Bank (IDB) and the Development Bank of Latin America and the Caribbean (CAF), reflecting the still-limited depth of purely private, commercially structured project financing involving international commercial banks in the local market.

Bolivia’s PPP framework remains underdeveloped for conventional infrastructure, but a distinct and increasingly important variant of public-private structuring is emerging around forest carbon and natural climate solutions, given the scale of Bolivia's forest estate. Bolivia holds an estimated 52 to 58 million hectares of forest, and analysts have estimated the country could generate up to 30 million carbon credits annually if that forest were properly protected and monitored, at prices of roughly USD5 to USD20 per tonne of CO2, translating into potential annual revenues in the range of USD150 million to USD600 million. Structuring access to this potential inevitably involves the State, given that forested land in Bolivia frequently sits on public land, protected areas, or titled indigenous territories, making most viable forest-carbon projects a public-private (or public-private-indigenous) partnership in substance even where they are not labelled as such.

The government’s centralisation of this activity through Ministerial Resolution No 76/2025, which channels carbon-credit negotiation and payments through the Central Bank of Bolivia and imposes an administrative management cost, functions as a de facto PPP gatekeeping mechanism for forest-carbon transactions, even in the absence of a dedicated PPP statute. As with mining and lithium association agreements (discussed further in 8.5 Structuring Deals), sponsors should expect that any sufficiently large forest-carbon arrangement involving state land or state entities will likely require sign-off beyond the national executive alone, potentially including departmental or municipal government involvement where local land management or community relations are affected, in addition to the centralised RM 76/2025 channel.

For project documents between purely private parties, with no State or state-owned entity as counterparty, Bolivian courts will generally uphold a choice of foreign governing law (commonly New York or English law) and submission of disputes to international arbitration, subject only to the general public policy limitations discussed in 6.2 Foreign Law and Jurisdiction. The constitutional constraints described below apply specifically, and only, where the State or a state-owned entity is a party to the relevant project document, not to construction contracts, offtake agreements or power purchase agreements between private commercial counterparties.

Where the State or a state-owned entity is a counterparty, the constitutional limitation is real and cannot be contracted around by choice of law alone. Article 320.II of the Constitution prohibits invoking any exceptional situation or foreign jurisdiction against Bolivian sovereignty, forming the basis for Bolivia’s 2007 withdrawal from ICSID, and Article 366 goes further for the hydrocarbons chain specifically, barring recourse to international arbitration or foreign courts without exception. Outside hydrocarbons, the position is less absolute but still restrictive: state contracts in mining, energy and infrastructure are generally expected to submit to Bolivian law and Bolivian-seated dispute resolution, and, as discussed in 8.5 Structuring Deals, frequently also require legislative and sub-national ratification before they take effect at all.

In our experience, one solution that has been discussed and used in practice to work around this constitutional limitation, without breaching it, is to seat the arbitration within Bolivian territory, under a locally accredited arbitration centre operating under Law No 708, while still populating the tribunal, in whole or in part, with internationally recognised arbitrators. Because the arbitration is technically domestic (Bolivian-seated and administered under Bolivian arbitration law), it satisfies the constitutional requirement that disputes involving the State remain within Bolivian jurisdiction; at the same time, appointing internationally experienced arbitrators, drawn from outside Bolivia where the arbitration rules and the parties’ agreement permit it, gives sponsors and lenders a tribunal with genuine international credibility and technical depth, which a purely local panel might not otherwise offer. This approach has not been definitively tested at the highest level of Bolivian constitutional jurisprudence, and its effectiveness will depend on the specific drafting of the arbitration clause and the sector involved (it remains unavailable, in our view, for the hydrocarbons chain given the absolute terms of Article 366), but it represents a pragmatic middle ground that sponsors negotiating state contracts outside hydrocarbons should discuss with local counsel before assuming that a foreign seat is simply unavailable to them.

Foreign ownership restrictions in Bolivia operate on three distinct levels for project purposes: surface land, subsoil, and water rights, each with different implications for a project’s ownership structure and for a foreign lender’s security package.

Surface Land

Article 263 of the Constitution prohibits foreign individuals and foreign-controlled companies from acquiring or possessing land within 50 kilometres of Bolivia’s international borders, subject only to a narrow state-necessity exception approved by a two-thirds vote of the Legislative Assembly. Article 396.II separately and more broadly prohibits foreigners from acquiring state lands under any title, regardless of location. Outside the border zone, foreign ownership of privately held surface land is generally permitted on the same basis as for Bolivian nationals.

Subsoil

Subsoil rights sit on a different footing entirely, and the border-zone restriction is not the operative constraint here. Under Articles 349 to 351 of the Constitution, all subsoil natural resources, including hydrocarbons and minerals, are the direct, indivisible and imprescriptible property of the Bolivian people, administered by the State; this is a form of state ownership that applies nationwide, not only within 50 kilometres of a border, and means that no private party, Bolivian or foreign, can hold outright ownership of subsoil resources anywhere in the country. Foreign (or domestic) participation is instead structured through contracts, licences or operating agreements granting rights to explore, extract and commercialise, rather than through a proprietary interest in the resource itself.

Water Rights

Water is treated as a similarly protected resource. Article 263 itself extends the border-zone prohibition to water, alongside land and subsoil, within the 50-kilometre security zone, and Bolivia's broader constitutional framework (Article 373) characterises access to water as a fundamental human right that limits the extent to which water rights generally can be granted, conceded or transferred to private parties, foreign or domestic, on an exclusive or extractive basis, particularly where a project’s water use could compete with basic human consumption or the rights of surrounding communities.

Implications for foreign lenders. A foreign lender can generally take, hold and enforce a mortgage or other security interest over surface real property located outside the border zone, using the same registration and perfection mechanics available to domestic lenders (see 5.1 Assets and Forms of Security). Two practical limitations follow directly from the above, however. First, a foreign lender cannot itself take ownership of mortgaged land situated within the 50-kilometre border zone upon foreclosure, since Article 263 applies equally to a foreign lender enforcing a lien as it does to any other foreign acquirer; enforcement in that scenario typically needs to be structured so that the property is sold to a Bolivian-eligible buyer, or held through a compliant local vehicle, rather than passing directly to the foreign lender. Second, because subsoil resources cannot be privately owned at all, a lender's security can never attach to the mineral or hydrocarbon resource itself; liens in resource projects instead attach to the project company's contractual rights, receivables, extracted and stockpiled product, and above-ground assets and equipment, which is an important structuring point for lenders to bear in mind when assessing what their collateral package actually gives them recourse to in an enforcement scenario.

Structuring a Bolivian project financing requires attention to several interlocking issues from the outset. The choice of project vehicle is typically a locally incorporated sociedad anónima under the Commercial Code, and sponsors should confirm early whether the project sits in a sector, such as hydrocarbons, mining, or increasingly forest carbon, where the State or a state-owned entity must be a direct counterparty, since this determines both the governing-law and dispute-resolution options available and the ownership limitations on subsoil, water and border-zone land.

A second, often underestimated, structuring issue is the multi-layered approval chain that contracts involving natural resources typically require. Because Articles 349 to 351 of the Constitution vest natural resources in the State, contracts with entities such as YPFB or YLB, and many broader mining or resource association agreements with foreign partners, generally require ratification by the Plurinational Legislative Assembly before they take legal effect, and departmental assemblies, municipal governments and departmental governments frequently hold their own approval or licensing rights over local land use and community-related aspects of the project. This approval chain should be treated as a distinct condition precedent category with its own realistic timeline, separate from the corporate and environmental approvals discussed elsewhere in this article, since ratification is subject to political dynamics as much as legal procedure.

Finally, sponsors should confirm applicable BCB foreign-exchange regulations at the structuring stage, particularly given the flexible exchange rate regime introduced in June 2026, and should factor Law No 516 (investment promotion) and the relevant sector statute (Law No 3058 for hydrocarbons, Law No 535 for mining) into the project’s overall legal and tax structure from the start, rather than treating these as matters to be resolved only once financing documentation is underway.

Bolivian project financing to date has relied predominantly on two sources: state-to-state financing arrangements, most visibly YLB’s agreements with Chinese and Russian partners in lithium, and multilateral development bank lending for broader infrastructure through institutions such as the IDB and CAF. Syndicated commercial bank financing, project bonds, and alternative sources such as streaming, royalty financing or commodity trader financing remain largely untested in the local market, reflecting both the bankability concerns discussed in the accompanying Trends & Developments article and the legislative approval chain described in 8.5 Structuring Deals, which international commercial lenders have historically found harder to underwrite around than multilaterals or state-linked lenders with more direct government relationships.

This is likely to shift only gradually. The IDB’s USD4.5 billion support package for 2026-2028 explicitly contemplates an expanded role for IDB Invest in mobilising private capital alongside its own lending, which could provide an entry point for international banks seeking initial exposure to Bolivian projects through co-financing structures. Whatever the financing source, lenders should confirm that any required legislative or sub-national ratification has actually been obtained, and is reflected as an effectiveness condition in the underlying project agreements, before treating disbursement conditions as satisfied.

Bolivia’s natural resources sit under a single constitutional principle with broad consequences: Articles 348 to 353 declare hydrocarbons, minerals and other natural resources to be the direct, indivisible and imprescriptible property of the Bolivian people, administered by the State rather than owned by any private party. This is the source both of the ownership limitations discussed in 8.4 Foreign Ownership and of the legislative ratification requirement discussed in 8.5 Structuring Deals, and it applies uniformly across the country rather than being confined to particular regions or border areas.

Export of hydrocarbons is subject to a domestic market supply obligation under Law No 3058, meaning production must satisfy internal demand before export is authorised, a rule with particular bite given Bolivia’s declining gas production and recent domestic fuel shortages. Mining export and beneficiation (in-country processing) requirements are set out in Law No 535 and its implementing regulations. The government has signalled interest in easing some of these constraints to attract new investment, particularly in mining and lithium, but the underlying constitutional principle of state ownership is not something ordinary legislation can alter, and sponsors should not expect this framework to change materially in the near term, regardless of sector-specific reforms.

Projects in Bolivia require an environmental impact assessment and corresponding licence under the Ley del Medio Ambiente (Law No 1333 of 1992) and its implementing regulations before major works, including mining, hydrocarbons and significant infrastructure, may proceed, with oversight from the Ministry of Environment and Water and relevant sector regulators. Community consultation obligations are a particularly significant component of this framework wherever a project affects indigenous territories, reflecting Bolivia’s constitutional recognition of indigenous rights, and sponsors should expect this consultation process to run in parallel with, rather than as a substitute for, the departmental and municipal approvals discussed in 8.5 Structuring Deals.

Financiers should treat environmental and community-consultation compliance as a genuine condition of bankability rather than a procedural formality, given the reputational and legal consequences that have followed projects, including some in the emerging carbon-credit space, where consultation was later found to have been inadequate. Confirming that a project’s environmental licence and any required community consultation are both complete and properly documented should form part of standard due diligence before financial close, alongside the corporate, sector-regulator and legislative approvals addressed elsewhere in 8. Project Finance.