The Intelligence from The Economist Without reserves: Bolivia faces an economic crisis
Apr 28, 2023
Anna Lankes, a Latin America expert, discusses Bolivia's economic crisis, driven by a reliance on natural gas and a dire dollar shortage. Mike Bird analyzes the delicate economic ties between China and the West, underscoring how these relationships influence markets. Mike Jakeman highlights Napoli's surprising rise in Serie A, showcasing key player performances and their effects on smaller clubs amid financial challenges in football. The conversation weaves through critical global economic themes and unintended consequences.
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Bolivia's Dollar Shortage
- Ana Lankes traveled to La Paz and spoke with money changers struggling to acquire dollars.
- Bolivians are buying alternative currencies due to dollar scarcity and the fixed exchange rate.
Unsustainable Economic Model
- Bolivia's economic model, reliant on natural gas exports, is unsustainable due to falling production and government overspending.
- The government maintained fuel subsidies and a fixed exchange rate despite dwindling reserves, leading to increased debt.
Potential Solutions
- Short-term relief may come from selling gold reserves and securing loans.
- Long-term, Bolivia needs to address structural issues and potentially capitalize on lithium resources.