Second Quarter Evolution and Third Quarter 2026 Guideline

BANCO CENTRAL DE BOLIVIA
MONETARY POLICY MINUTE
The Board of Directors of the Central Bank of Bolivia (BCB) approved the Monetary Regulation Operations Guideline for the third quarter of 2026, within the framework of the modified Monetary Program.

Within the framework of the modified 2026 Monetary Program for the current management period, the Board approved the monetary policy orientation for the third quarter, prepared by the Economic Policy Advisory and previously approved by the Monetary and Exchange Policy Committee (COPOMYC) at its session on June 26, 2026.
The unanimous decision of the collegiate body was adopted at its session on July 7, 2026, in strict compliance with the provisions of Article 6 of Law No. 1670, of October 31, 1995.

I. Relevant Economic Context
During the second quarter of 2026, the global economy continued to operate in an environment of high uncertainty, although with a partial moderation of geopolitical risks. International inflation maintained a gradual downward trend, while the main central banks in the region maintained a cautious stance, with monetary policy rates still elevated. In this context, external conditions for Bolivia continued to generate pressures on the prices of imported fuels, while the region's monetary conditions facilitated high import prices, given their inflexible downward active interest rates.

Counterbalancing the described scenario, several of Bolivia's main export products remained at relatively favorable levels, resulting in a significant improvement in the terms of trade, although in the last part of the quarter this trend began to reverse.

Internally, economic activity was affected by social conflicts and blockages recorded during the second quarter, which interrupted supply chains and restricted the normal development of production, transport, and commerce. Consequently, inflation registered a significant increase, explained mainly by supply shocks associated with restrictions on the supply of food and fuels.

In this context, the execution of the Monetary Program during the second quarter of 2026 maintained the contractive orientation of monetary policy, contributing to the absorption of excess liquidity and laying the foundations for the transition to the New Monetary Policy Framework, which begins with the definitive abandonment of the nominal exchange rate anchor. As a result, the Monetary Base registered a significant contraction, driven mainly by monetary regulation operations; although in the months of May and June the BCB had relevant resource maturities that obliged it to inject liquidity into the financial system, this action was partially sterilized with the increase in the legal reserve ratio, the cancellation of credits guaranteed by funds, as well as the measures implemented regarding exchange position.

Although the modification of the percentage of funds in custody implied an increase in monetary emission associated with a recomposition of its components, this responded exclusively to a monetary policy decision and did not constitute an additional injection of liquidity into the financial system, so it does not generate inflationary pressures nor alter the management of financial intermediation. On the other hand, Net International Reserves showed a moderate recovery, backed by the placement of sovereign bonds, reserve management operations, gold purchases, and disbursements of external financing.

In the exchange sector, during the second quarter, Chapter VII of the Exchange Operations Regulation was nullified, eliminating the maximum and minimum exchange rates applicable to the purchase and sale of United States dollars between the financial system, exchange houses, and their clients. This measure consolidated the use of the Reference Value of the United States Dollar as a reference for such operations.

This process culminated at the end of June with the implementation of the exchange flexibility regime, marking the transition from a nominal anchor scheme based on the exchange rate to a New Monetary Policy Framework where the Monetary Base becomes the nominal anchor.

II. Monetary Policy Orientation for the Third Quarter of 2026
Based on the evaluation of the internal and external economic context, as well as the recent evolution of inflation and the liquidity of the financial system, the BCB Board decided to maintain a contractive and prudent orientation of monetary policy for the third quarter of 2026, with the purpose of preserving the stability of the internal purchasing power of the currency, within the framework of the modified Monetary Program.

The decision is adopted under a macroeconomic scenario in which the modified Monetary Program foresees a gradual recovery of economic activity during the second half of the year, once the effects derived from social conflicts are overcome and supply chains are normalized. However, the deterioration observed during the first half would imply that the economy closes 2026 with a possible contraction.

The macroeconomic scenario also incorporates the expectation that the exchange flexibility regime will favor the inflow of foreign currency from exports and remittances to the financial system, contributing to the orderly functioning of the exchange market. Under this scenario, it is expected that the inflationary pressures observed during the second quarter will gradually moderate, allowing inflation to gradually converge to a single digit.

In this way, the BCB will continue with a strict and rigorous monitoring of the economy so that monetary policy adjusts to the evolution of the liquidity of the financial system, potentially incorporating additional monetary regulation instruments when conditions require it, with the purpose of maintaining the expected trajectory for the Monetary Base and contributing to the fulfillment of the objectives established in the modified Monetary Program.

Although the Issuer's effort to control the expansion of payment means is important, the consolidation of measures will depend on macroeconomic reconciliation.

Finally, in the context of the New Monetary Policy Framework, the BCB will carry out rigorous monitoring of the behavior of the Monetary Base, whose annual growth will be around 1.36%. The trajectory of the Monetary Base is also subject to the use of deposits that the government sector may make. Consequently, to the extent that external financing consolidates, additional liquidity withdrawals may not be necessary.

MODIFIED MONETARY PROGRAM
(Flow in millions of bolivianos)
Guideline Q3
MONETARY EMISSION 696
NET DOMESTIC CREDIT (NDC) 1.588
NDC of BCB to Non-Financial Public Sector 9.659 NDC of BCB to Financial Sector 2.364 Monetary Regulation -9.696 Others -739 NET INTERNATIONAL RESERVES (Expressed in millions of dollars) -99 Pro memoria Monetary Base* 5.483 Notes: Figures were calculated according to international methodologies. The Monetary Program may be subject to adjustments based on the realization of scenarios not foreseen within the projection framework. Others: includes net medium and long-term external obligations, quasi-fiscal, and other net accounts of the BCB.

• In national currency and UFV at the end of the period.
  Source: Central Bank of Bolivia.

MONETARY BASE*
(Balance in billions of bolivianos)

• In national currency and UFV at the end of the period.
  Source: Central Bank of Bolivia.

La Paz, July 10, 2026.