In the Latin American financial landscape, country risk is an important indicator reflecting investors’ confidence in a country’s ability to meet its fiscal obligations. Through the Emerging Markets Bond Index (EMBI) developed by J.P. Morgan, this variable is measured by comparing emerging market sovereign bond yields to U.S. government bond yields.
According to Bloomberg Online, recent data shows that Bolivia’s risk index stands at 1,801 points, making it one of the highest in the region, surpassed only by leader Venezuela’s 20,700 points.
This high level of country risk for Bolivia represents a significant economic challenge and reflects investors’ perceptions of the country’s financial and political context. High risk can increase funding costs and limit investment opportunities. This situation contrasts with that of other countries in the region, which have succeeded in lowering their risk indices to more competitive levels.
For example, Argentina and Ecuador have shown significant improvement since the end of 2023, with a significant decline in their risk index. Argentina managed to reduce its country risk to 1,044 points, while Ecuador lowered the index to 1,207 points. Both countries have implemented market-oriented policies that have contributed to improving investor confidence.
At the other end of the spectrum, countries such as Uruguay and Chile continue to lead the list of safest issuers in Latin America, with country risk indexes of 92 and 117 points, respectively. These numbers reflect the economic and political stability of both countries and confirm that they are the most reliable economies for investment in the region. Other countries such as Paraguay (155 points) and Peru (158 points) also show relatively low risk levels.
The region’s two largest economies, Mexico and Brazil, maintain mid-way positions in the ranking. Brazil’s country risk is 202 points, while Mexico’s is 305 points, a slight improvement from 340 points at the end of last year.
