Economist Podcasts Without reserves: Bolivia faces an economic crisis
Apr 28, 2023
Join Anna Lankes, who writes about Latin America for The Economist, and Mike Bird, the publication's Asia business and finance editor, as they dive into Bolivia's economic crisis fueled by dwindling gas reserves. They discuss the nation’s struggles with a dollar shortage and rising debt, alongside public distrust in its currency. The conversation also touches on the broader implications of the China-West relationship and how it shapes global markets, showcasing a fascinating intersection of local challenges and international dynamics.
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Bolivia's Unsustainable Model
- Bolivia's economic model, reliant on natural gas exports, proved unsustainable.
- Overspending, fuel subsidies, and inefficient state firms depleted reserves despite initial success.
Nationalization and Falling Gas Production
- The government maintained fuel subsidies and nationalized gas fields in 2006, deterring investment.
- Gas production fell significantly in 2014, worsening Bolivia's finances.
Public Response and Government Denial
- Bolivians are withdrawing savings and buying foreign currencies due to dollar scarcity.
- The government has been slow to acknowledge the problem and downplays the need for devaluation.