“I buy dollars.” Many businesses in large Bolivian cities have posted this poster in their windows. The US currency has become the scarcest commodity in the country. So much so that the Central Bank has not reported its foreign currency reserves for four months. They are supposed to be meager, and since everything that is scarce rises in price, the dollar has begun to be bought outside the financial system. In that parallel market it costs 15% more than the official price.
Selling and buying dollars above the value set by the State is prohibited and several people have been temporarily detained for doing so. Even so, no one in the shops with the signs thinks of buying at a price that is no longer real for ordinary citizens. Devaluation is officially ruled out, but it has in fact occurred. Nobody expects the exchange rate and, with it, the economic dynamics, to return to what it was before.
Opposition economists conjecture that Bolivia will follow the path of its neighbor Argentina, which suffers a constant deterioration in its exchange rate, with a parallel market established for more than a decade that doubles the official price. In Bolivia there is no inflation, but the lack of dollars is raising the prices of imported products, which are many in a country with little industrialization. It is not the only difficulty for importers. To prevent the flight of dollars abroad, which partly explains the fall in the Central Bank’s international reserves, currency transfers must pay 10% of the amount sent, a percentage that must be added to import costs.
Until now, the coup has hit mainly the middle class and not the broad popular sectors that supported President Luis Arce in the elections two and a half years ago. But the problems are piling up. Medicines, for example, which come from Chile, Colombia and India, are rising and some are becoming scarce. It is a matter of time before the de facto rise in the dollar is transferred to the cost of living. The authorities assure that this will not happen.
Another key good that is rationed in certain consumption ranges is diesel. The Government affirms that this is due to the need to control the smuggling of this fuel, which, although it is imported for the most part, is subsidized. A liter costs 50 cents in Bolivia, more than a dollar less than the world average. The smuggling of fuel to neighboring countries bleeds the public budget by some 250 million dollars a year. The opposition believes that the rationing is due to the lack of diesel that the Government no longer has a way to import. There are complaints that the Arce administration is leaving the invoices of the importing companies unpaid. It is known that some large mining and agricultural companies are importing diesel directly, despite the fact that the international price is higher.
Another difficulty in the Bolivian balance of payments is the drop in exports since August of last year. The cause is the drop in the international value of various raw materials that Bolivia produces and lower gas production. The country is extracting 33% less gas than it produced in 2014. The resulting trade deficit (more imports than exports) has dragged on for eight months, so with the Central Bank running out of reserves, the government has nowhere to go. get foreign currency On top of that, some private exporters do not repatriate their currencies because they fear that they will be “trapped” in banks thirsty for dollars and because of the high rate they would have to pay to get them out of the country again.
Join EL PAÍS to follow all the news and read without limits.
subscribe
President Arce was the Minister of Economy of the three governments of Evo Morales, between 2006 and 2019. Arce is the great face of the “Bolivian miracle”, the period of greatest prosperity in the country’s history, when, among other records, they accumulated international reserves for 50% of GDP. Arce has come to be considered the best economist in the country, but now he seems to be devoid of solutions.
Arce has denied in recent months that Bolivia is facing an internal crisis. He prefers to talk about the effects, in his fleeting vision, of the bad world economic moment. Since, for ideological reasons, he has not yet considered resorting to the International Monetary Fund, his government has begun to look for solutions. The last one, to attack the exchange restrictions, was to approve the “gold law”, which authorizes the Central Bank to sell 22 tons of its reserves to obtain some 1,200 million dollars. This law, says the Government, will prevent Bolivia from defaulting this year. But the country needs an equal or greater number, which it does not have, to try to change the expectations of Bolivians, which today are those expressed by the “buy dollars” signs.
Subscribe here to newsletter from EL PAÍS America and receive all the key information on current affairs in the region
#Bolivian #economic #miracle #creaks #due #lack #dollars