The Determinants to Finance the Fiscal Deficit

César Daniel Vargas Diaz, Hernan Delgadillo Dorado and Alvaro Ramiro Vasquez De la Vega

World Economics, 2024, vol. 25, issue 3, 92-115

Abstract: Bolivia faces a shortage of foreign currency, especially dollars, due to a decline in natural gas exports. This decline leads to reduced foreign exchange income and savings, impacting the productive community's social economic model and causing macroeconomic imbalance. The research identifies independent variables affected by this shortage, all denominated in dollars: gas exports, international reserves, external debt, trade balance, foreign remittances, and the pension portfolio. These variables are essential for meeting obligations and expenses in the General State Budget, with the fiscal deficit being the dependent variable. The study covers the period from 2006 to 2023, during which the economic model was applied. Polynomial projections of each variable were made to identify cyclical patterns or trends. Multiple regression analysis showed a multiple correlation coefficient of 97%. The trade balance and the pension portfolio had negative and significant coefficients, while the other variables had positive and significant coefficients, except for gas exports.

Date: 2024
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