Narayan AmmachchiBolivia is liquidating gold reserves worth $1 billion as the country grapples with a severe foreign currency shortage, escalating political tensions, and mounting economic pressure.
Official data reveals that Bolivia’s foreign currency reserves have dwindled to a mere $166 million — insufficient to finance fuel imports on the international market. Economists attribute the crisis to decades of fuel subsidies and a rigid exchange rate policy.
The Bolivian government has maintained a fixed exchange rate of 6.9 bolivianos per U.S. dollar. However, the black-market rate is significantly higher, exacerbating inflationary pressures. A decade ago, Bolivia held more than $15 billion in reserves, but extensive government borrowing from the central bank to cover fiscal deficits rapidly depleted these funds.
Amid the worsening economic outlook, Fitch Ratings downgraded Bolivia’s credit rating from B- to CCC, citing the lack of a credible fiscal consolidation strategy. Experts warn that the country urgently needs to devalue its currency, but such a move remains unlikely given the volatile political climate.
The political landscape is deeply polarized, dominated by a power struggle between President Luis Arce and former President Evo Morales. Arce, who previously served as Morales’ finance minister, ascended to the presidency in 2020. However, their alliance has since fractured, with both men vying for the presidency in the upcoming August elections.
Morales, who ruled Bolivia for nearly 14 years, was forced to resign and flee into exile in 2019 following allegations of electoral fraud, mass protests, and military pressure. Now seeking a return to power, he faces fierce resistance from Arce, who is unwilling to act as his political placeholder. Their conflict has led to a wave of accusations — including treason, corruption, and drug trafficking—dominating national discourse and deepening political divisions.
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