Govt: Deposits recover despite ITF impact

Bolivian bank deposits began to recover in the first quarter this year after falling 5% in 2004 partly due to the affects of a tax on financial transactions, or the so-called ITF, the government announced. Total deposits in the Bolivian financial system fell to US$2.4bn in December 2004 compared to US$2.6bn at the same time the previous year. The initial impact of the ITF appears to have subsided as an improved financial outlook has led to increased confidence in the financial system, the government report said. Dollar-denominated deposits have fallen to 85.4% of total deposits at the end of 2004 from 90.1% the previous year due to effects of the tax. The tax went into effect on July 1, 2004 and taxes all financial transactions including credit and debit operations in local and foreign currency as well as checking accounts and savings accounts in all financial institutions, and also remittances from abroad. The government collected 283mn bolivianos (US$35.3mn) in its first five months.