The circulation of dollars in Bolivia has led to problems in accessing imports of various products, ranging from medicines to fuel. This situation has triggered massive protests and blockades across the country, with the underlying causes being diverse.
The government used international reserves, which in 2014 amounted to $15 billion—a large accumulation due to the boom in international prices between 2006 and 2014. Bolivia benefited significantly from gas exports at high prices, generating $60 billion in revenue. However, after that period, despite the drop in gas prices and export volumes, the government continued to spend excessively.
Currently, Bolivia has $1.7 billion in reserves, of which only $1.38 billion are in foreign currency. This means the government has depleted the reserves after 12 years of fiscal deficits at an 8% rate. To cover this deficit, they have drawn from these reserves.
Over the past 15 years, the government implemented public policies to control the skyrocketing food prices. This helped supply the domestic market and break the inflationary cycle affecting neighboring countries. However, Bolivia is facing a significant fiscal deficit, causing a shortage of dollars. The state is the one that sets the exchange rate. In November of last year, the annual inflation rate reached 9.5%, which sparked considerable discontent and disputes with the government.
Since 2023, Bolivia’s main export, gas, has seen a drop in its volume, especially to neighboring countries like Brazil and Argentina. In response, the government resorted to international reserves to subsidize the price of fuel, which is imported. Bolivia spends $4 billion annually on this subsidy, while the government spends more than it collects in revenue.
Former President Luis Arce, aiming to maintain his social and economic policies, turned to the central bank’s dollar reserves. The fiscal deficit, averaging 8% of GDP, continues to burden the economy. Today, due to a significant decline in the capital of the monetary authority, Bolivia’s reserves stand at a dangerously low level of $1.9 billion, of which $153 million are in gold.
Bolivia’s international reserves have reached a near-collapse point. Bureaucratic expansion has further aggravated the situation, with the state now employing 600,000 public servants that cost $19 million a day. Banks are unable to supply dollars, further restricting access.
The mismanagement of this crisis, and the lack of concrete solutions, is becoming more pressing. The problem is structural: the state has never explored new gas reserves, and for 18 years, it has imposed quotas on gas exports and price controls—policies reminiscent of the socialism seen in countries like Venezuela.
To begin addressing this crisis, Bolivia must focus on reducing public spending to stop depleting its reserves. There must be a reorganization of priorities, but without abandoning the core principles of social spending.