- Datum: 12.09.2024
- Land:Bolivien
- Kategorie:Berichte & Analysen
On the edge of a currency crisis
Bolivia is likely to face a currency crisis as long as the government maintains a fixed exchange rate without international reserves to back…
Bolivia is likely to face a currency crisis as long as the government maintains a fixed exchange rate without international reserves to back it up, experts say. Significant structural reforms are therefore needed to regulate the government's reach. From 2003 to 2014, when the country was experiencing a commodity boom, the nation was the second largest beneficiary of higher export prices after Venezuela. During those years, Bolivia enjoyed a cumulative windfall estimated at 200% of its GDP, and at the end of 2014, the country's international reserves reached a record high of almost $14 billion. However, as soon as the price of gas and gas production fell, the government decided to use its reserves to maintain this level of growth and consumption. Today, the reality is different: Bolivia is experiencing a cumulative fiscal deficit after the boom of 2014. In addition, there are currency mismatches in the banking sector, while the pension system is being forced to purchase excessive amounts of public debt. The accumulation of these financial vulnerabilities will make the eventual adjustment even more traumatic. Consequently, possible policies that could help to exit the crisis include reducing inefficient public investment and energy subsidies, and closing state-owned enterprises that do not provide a public service or generate net revenues. In addition, investment should be attracted to the hydrocarbon, mining and forestry sectors.
Read here the full article: Bolivia’s Economy on the Brink