In central La Paz, thousands of Bolivians lined up endlessly outside the Central Bank to try to buy what has become the most precious commodity in the country: the dollar. The financial crisis that has gripped the country for years has squandered the foreign currency reserves held by the government. The state of being abandoned for some time, natural gas, the country’s main export sector, has prevented the current executive, led by socialist Luis Arce, from raising the necessary funds to support the national currency.
Residents of the city, whose height exceeds 3.5 thousand meters, began to gather under the headquarters of a banking institution in Bolivia, early yesterday evening. Chilling from the low Andean temperatures, many spent the entire night camping on the sidewalks, waiting their turn. “Imagine how much time we spent on a transition that was supposed to be easy,” said one lawyer trying to withdraw $5,000. The shortage of American currency in Bolivia affects the entire system of commercial banks and offices, a shortage so deep that it deprives even the black market. According to the latest government report quoted by Globo, the amount of national reserves will not exceed $372 million, enough to cover just two weeks’ imports. Moreover, most of them would be kept in gold, and according to a parliamentary law that the executive was trying to amend, it would not be possible for the Arce government to convert a large part of these gold reserves into dollars.
Since last February, the Central Bank has stopped reporting the value of foreign reserves in connection with the Bolivian government’s request to withdraw dollars from citizens or reduce their purchase. In response, the public was alarmed, and many, aware of the country’s hyperinflationary past, rushed to withdraw their savings or buy foreign currency, which is still a fresh memory in the minds of all Bolivians. “In the ’80s, my family was walking around with a backpack full of bills to go shopping, a lot of money that was worthless, so we panicked,” said housewife Violeta Lopez, who had been queuing for more than six hours. Try to withdraw a few thousand dollars. The biggest fear is that a negative price spiral could be triggered at any moment, which could destroy the value of the national currency Bolivia.
The current situation has led the socialist government to strengthen its measures against illegal currency smuggling, consider that in just 24 hours police forces arrested 13 people on black trade charges last week. According to many economists, including Bolivian Antonio Saraiva, this crisis dates back to 2006, when Evo Morales came to power. The victory of the left leader was followed by the nationalization of the refineries as well as the gas fields held by Repsol, Total and Petrobas on the Venezuelan model. At first the move worked, Bolivia raised funds thanks to the rise in international oil and gas prices, quadrupled its economy, and improved the lives of its people as a result. These happy developments, however, were not accompanied by Bolivia’s investments in underground exploration aimed at finding new deposits, and no steps towards economic diversification were taken that would allow the country to reduce its exclusive reliance on natural gas.
Gas reserves have dwindled over the years, as have exports, which halved in 2014 and are expected to run out by 2030, according to consulting firm Wood Mackenzie. “Production in Bolivia has been falling steadily since 2015,” said Wood Mackenzie analyst Amanda Bandiera, “with few new discoveries and very little mature field supply. At the end of the year, the demand will exceed the supply and the country will become an importer”.
Arce, who has been finance minister for most of Morales’ 14-year tenure, is trying to reverse this trend by accelerating exploration wells. “It is necessary to invest aggressively in exploration and development, today we are paying the price for not doing it sooner,” said current finance minister Marcelo Montenegro. said. The executive takes advantage of the lack of gas supply in the international market to raise prices, and is also working on the development of biofuels. The country can also count on massive lithium reserves, the world’s largest, as it has signed a billion-dollar contract with Contemporary Amperex Technology, a Chinese battery manufacturer, to allow the exploitation of reserves found in salt. pan Bolivia. According to analysts, the country needs to open more roads, find different partners and expand its potential, all of which will not happen in the short term.
Source: Today IT

Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.