BOLIVIA in Deep Trouble – Military Coup, Out of Cash & Reserves Dangerously Low

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July 4, 2024

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Bolivia, a landlocked country in South America, has been in the spotlight recently due to a government estimation of a potential coup attempt, which ultimately failed. But what’s really going on in this country, and is it as secure as it seems? With a rich history and natural resources, Bolivia has always had the potential to thrive. In the 1980s and 1990s, it was known for cocaine production, but in recent decades, the government has made significant efforts to reduce this industry and revamp the economy.

Indeed, the country is blessed with many natural resources, including oil, gas, gold, tin, and lithium. Its main export is natural gas, which accounts for 22% of its total exports. Additionally, it has significant reserves of gold, with 42.5 million tons held by the central bank. However, these reserves have been declining steadily, with the country selling 17 tons of gold in 2023, raising an additional $1 billion in cash.

Despite these natural resources, Bolivia’s economy is facing significant challenges. The country has been providing huge subsidies to its citizens to keep prices of basic goods, such as fuel and food, low. However, this has put a massive strain on the government’s finances, with reserves falling from $15 billion to $2 billion in recent years. The external debt has also increased, reaching $38.5 billion by 2023, with a forecast to almost double to $63.6 billion by 2029.

The situation is nearing a breaking point, with experts warning of an economic collapse if the government does not address this issue. The country’s reserves are at a precarious low, and relying on them to finance its expenses is not sustainable. The potential for another law to be passed, allowing more gold to be sold, is a real possibility, which could see the country’s reserves disappear entirely.

Given the upcoming election in 2025, it is unlikely that the current president will make hard decisions to cut back on subsidies and introduce austerity measures, as this would threaten his hold on power. As a result, the country is likely to continue down this unsustainable path, putting its economy at risk of collapse. The situation is dire, and only time will tell if Bolivia can find a way to get its economy back on track.