Bolivia approves selling up to 50% of its gold reserves due to a shortage of dollars

bolivian will be able to sell up to 50% of its gold reserves, according to a law that was approved this Friday, May 5 by Congress and that was promoted by the government of Luis Arce to alleviate the dollar shortage.

The president will sanction the norm that the majority of the government voted for and that allows the issuing bank to get out of half of its reserves, out of a total of 43 metric tons, despite objections from the opposition.

“Twenty-two tons, half, is left without capacity for use or for sale purposes”, said the Minister of Economy for the press, Marcelo Montenegro.

At the same time, the Central Bank of Bolivia was empowered to buy gold from local producers and thus replenish its international reserves, which currently stand at around 3.5 billion dollars.

This law will allow “the strengthening of International Reserves, affected by exogenous causes such as the adverse effects of an unforeseen war between Ukraine and Russiaand the consequent increase in the cost of importing fuels”, according to the president of the central bank, Edwin Rojas.

The General Budget of the Nation for 2023 foresees an expense of 1,114 million dollars in the subsidy for the internal prices of diesel and gasoline. Last year that amount reached 1,713 million dollars, according to the state oil company YPFB.

The Arce government argues that it has had to allocate more dollars to cushion fuel prices, generating a shortage of foreign currency in the financial system.

However, the economist and academic Gonzalo Chávez believes that the decline in reserves began in 2014, when they totaled 15.1 billion dollars. The “bad investments” from the State made them fall to the current 3,500 million dollars, he pointed out in a recent opinion article.

Added to this is apublic deficit of 7.7% of GDP, on average for nine years, as a symptom of (a) very deep crisis”. In addition, gas exports have “dropped from 6,600, in 2014, to 3,000 million dollars, in 2022,” Chávez explained.

Source: AFP