Economy & Business - April 2023

Panic over dollar shortages in Boliva

Queues have been forming for weeks outside Bolivia’s central bank in downtown La Paz, as the supply of US dollars available at commercial banks and traders has dried up. In mid-March, it was reported that lines to access dollars at the central bank stretched for two blocks, and people are continuing to form queues in the dead of night in order to be first on the scene when the bank opens in the morning. Monetary authorities have denied a shortage of dollars, although weeks of opacity on the extent of Bolivia’s foreign reserves have only added to fears of an impending currency crisis. For now, the worst-case scenarios – a currency devaluation or a default on dollar-denominated bond repayments – seem unlikely to materialise. Nevertheless, the government has already resorted to its special drawing rights (SDR) arrangement with the International Monetary Fund (IMF), and it is looking to liquidate some of the central bank’s gold reserves.

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