• May 15, 2019
  • by Marcel Rivera

Commemorating Labor Day, on May 1 Supreme Decree 3888 was issued, which regulates the salary increase and the minimum wage for the private sector. This supreme decree establishes that the salary increase will be agreed upon between workers and employers with a minimum increase of 4% and that the new national minimum wage will be equivalent to Bs 2,122.00 (an increase of 3% in relation to the previous year). According to this Supreme Decree, these determinations should be regulated by the Ministry of Labor, Employment and Social Welfare, which issued this regulation in the form of Ministerial Resolution No. 425/19, a regulation published just a couple of days ago (precisely on May 13).

This Ministerial Resolution establishes a series of important details concerning the salary increase, such as:

- A “Collective Agreement of Salary Increase” must be executed to formalize the salary increase, signed by the employer and the representatives of the workers (representatives of the union). If these representatives do not exist, a majority of the workers and the employer must execute it.

- The increase is not mandatory for people in certain executive positions (presidents, vice-presidents, board members, managers, etc.) who have a salary level consistent with that position.

- If, even with a salary increase, the national minimum wage is not reached, employees must be paid the minimum wage. On the other hand, if the salary increase grants an amount higher than the minimum wage, this higher amount must be paid (i.e. employers cannot increase salaries by less than 4% in order to pay only minimum wage). In addition, wage increases of less than 4% that were made before the existence of the Supreme Decree must be leveled; however, salary increases greater than 4% that were made before the issuance of the Supreme Decree must continue to apply.

The Collective Agreement must be submitted until June 28, 2019 (July 30 for the mining sector) through the Virtual Office of Procedures of the Ministry of Labor, Employment and Social Welfare, attaching: i) a Sworn Statement Form of Salary Increase containing the data of the deposit that must be made by concept of "Retroactive Salary Increase Form"; ii) Retroactive Salary Increase Form in the form set forth in the Virtual Procedures Office, retroactive to January 1, 2019; and iii) the Collective Salary Increase Agreement scanned in PDF format (containing the signatures of the workers).

Although the deadline to carry out this procedure is June 28, the Ministerial Resolution establishes a deadline until May 31 to sign the Collective Agreement and perform the retroactive payment of the salary increase for the year 2019. It also warns that the presentation of the Agreement does not exempt the employer from the monthly presentation of the Salaries, Wages and Work Accidents Form.


Marcel Rivera

Guevara & Gutiérrez

The Pension Fund Administrators (AFPs in Spanis) fulfill an extremely important task in the Bolivian
capital markets. Together with Private Investment Funds (SAFIs in Spanish) and the insurance
companies, the AFPs are the main investors in bond issues made through the Bolivian Stock
However, the presence of AFPs in Bolivia will eventually end. The Pension Law (Law 065 of
December 10, 2010) establishes that the Pension System will be transferred from the AFPs to the
control of a State Pension Fund, incorporated as a National Strategic Company. The full
implementation of the State Pension Funded, contemplated for 2016, has already been delayed in
three separate occasions. Recently, Supreme Decree 3837 dated March 20, 2019, has once more
extended the deadline for the start of activities of the State Pension Fund, for an additional 30
It is relevant to analyze what will happen with the investment of the pension funds, when the
functions of the AFPs are finally transferred to the State Pension Fund. Will the State Pension Fund
perform the same functions that are currently fulfilled by the AFPs? If the regulations that govern
the State Pension Fund are different from the regulations that currently govern the AFPs, the
pension funds could play a less important role in the market of bonds issued in Bolivia.
Article 40 b) of Law 1732 (Former Pensions Law, applicable to AFPs) establishes the following, with
respect to the investment limits of the AFPs: "No more than 40% (forty percent) of the securities
must belong to the same issue or series, in accordance with the Rules." This 40%, however, was
referring to the limits established for each of the two AFPs, and therefore, the effective limit of
joint investment of the AFPs in bond issues, was of 80%.
However, art. 140 of Law 065 (current Pensions Law) establishes the following limit for the
investment of resources of the funds managed by the State Pension Fund: "No more than sixty
percent (60%) of the amount of the same issue or Securities o Financial Instruments by Fund."
Therefore, in the future, the State Pension Fund will have investment limits, which are different
from the current ones, decreasing, in our opinion, its dominance in the Bolivian capital markets.
The differences between AFPs and the State Pension Fund, in their role as institutional investors,
do not end there. Administrative Resolution APS/DJ/UI/ No. 464/2017, of April 19, 2017, approves
a new investment regulation for the funds of the State Pension Fund. A detailed analysis of this
norm reflects some other very relevant differences. For example, article 5 e) establishes that: "The
sum of investments made in an Issuance of Securities or in Issuances included in a single Securities
Issuance Program (with a risk valuation) exceeding one percent (1) %) of the value of the Fund,
may be made only if the issuance or the program has two continuous and uninterrupted risk
ratings [...] ". Therefore, the need to have two risk ratings is subject to the value of the specific
fund, which is markedly different from the current regulation, in which the determining factor for
requiring two risk ratings is subject to the amount of the specific issuance (with a threshold of 25
million dollars to activate this additional requirement).

Companies that, in the future, wish to issue bonds, should take these and other aspects into

Enrique Barrios and José Bernal
Guevara & Gutiérrez S.C.

  • Mar 26, 2020
  • by Nina Leguizamon

The health emergency generated by the spread of COVID-19 has led different governments to take preventing measures aiming to stop the transmission of the virus in their territories. In Bolivia, the government ordered the total quarantine of the population as determined by Supreme Decree No. 4199 dated March 21, 2020, which provides in its Article 2, paragraph I:

“Article 2. – (Total Quarantine Declaration)

  1. In safeguard of life and health as fundamental rights of Bolivians, Total Quarantine is declared throughout the territory of the Plurinational State of Bolivia, from zero (0) hours on Sunday, March 22, 2020, until Saturday, April 4, 2020*, with the suspension of public and private activitiesin light of the national health emergency declaration against the transmission and spread of Coronavirus (COVID-19)”. [Added emphasis].
[*] This date was modified by Supreme Decree 4200 dated March 25, 2020.

These determinations are adopted to adequately address the current situation generated by COVID-19. However, they also represent new legal circumstances that influence the fulfillment, or non-compliance, of contractual obligations.

These circumstances do not justify, by themselves, a failure to comply with the terms of a contract. To establish whether the current situation is a justified cause for non-compliance, the specific case must be assessed. The possibility that the pandemic and measures taken by governments are factors that influence contractual relationships depends on multiple factors such as:

  • What type of contract is this?;
  • Is there a clause that foresees this kind of situation?;
  • Is there an alternative way to comply with contractual obligations?;
  • What are the obligations regarding the communication of these circumstances?

For example, in some cases, these circumstances may result in the termination of the contractdue to supervening impossibility, in other cases, they justify a change in the term or schedule of compliance with obligations due to a cause of force majeure.

Bolivian jurisprudence, expressed in the Supreme Court of Justice Sentence No. 33/2015 of January 19, 2015, understands supervening impossibility and justified involuntary contract breach as “the insurmountable and unforeseeable obstacles presented after the contract signing, circumstances of “force majeure” and “act of God” that make it impossible to comply with the obligation, that is, when the person obliged does not comply with the obligation due to unforeseen reasons, unrelated to his will” [Added emphasis]. In other words, to claim the existence of an involuntary contract breach, it is necessary to prove that it is: i) an unforeseen event, ii) outside the will of the parties, and iii) that has occurred after the contract signing.

It is also possible for the parties to a contractual relationship to have agreedon a force majeure clause that determines aspects such as:

  1. What circumstances are considered force majeure (using a broad or restrictive definition). If the clause provides for a restrictive definition that does not specifically consider situations such as the ones created by the sanitary emergency, there may be differences among the parties as to the applicability of the clause.


  1. There may be a dutyto give notice of an event, in writing to the other party within a limited number of days, in which case the party that wishes to defer or stop contract compliance must act quickly and provide notice.


  • The party claiming force majeure may need to take damage mitigation duties, and show that they tried to mitigate the damage caused by the unforeseen events.

In such cases, these clauses must be understood as an expression of the free will of the parties to the contract and, for the time being, Bolivian jurisprudence has not set limits on their contentand applicability.

We recommend that the decisions taken by the parties are always within the framework of contractual good faith. If one of the parties intends to invoke a circumstance of force majeure as a result of the current situation caused by COVID-19, the parties must respect any specificagreements between them and act diligently.

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