The International Monetary Fund warned Bolivia May 18 of "far-reaching consequences" of its decision to nationalize oil and gas resources, if the move is not handled properly. IMF spokesman Mahsood Ahmed said the impoverished South American nation may lose access to foreign capital if it fails to compensate companies affected by the nationalization.
"The decision of the Bolivian government to nationalize the hydrocarbon sector has potentially far reaching economic consequences," the IMF spokesman said. "In terms of how these aspects are handled, it could have an impact on the continued availability of domestic and foreign private capital to be invested in the hydrocarbon sector which is an important part of the Bolivian economy."
Bolivian President Evo Morales announced the nationalization plan May 1, saying the country was recovering its assets. Although many details remain unclear, foreign companies have up to 180 days to renegotiate their contracts with the state-run Yacimientos Petroliferos Fiscales Bolivianos (YPFB), which will become the majority shareholder in the reformed corporations. During the transition period, 82% of profits will go to the Bolivian state and 18% to corporations.
The IMF, which has a team of experts in Bolivia, urged the new government to discuss terms of the plan with multinational companies in the coming six months. Ahmed said the talks should cover "discussions on the compensation for the nationalized assets, the nature of new operating contracts and possibly an increase in export prices to Brazil and Argentina."
Copyright Agence France-Presse, 2006