The president of Bolivia, Luis Arce, sanctioned a law that will allow the sale of up to 50% of the country’s gold reserves in order to alleviate the shortage of dollars. The Central Bank of Bolivia (BCB) has a total of 43 metric tons of gold and will be able to get out of half of its reserves thanks to the new law. Economy Minister Marcelo Montenegro explained that 22 metric tons, or half of the bank’s reserves, will not be available for sale and will be used for other purposes.
The law will also allow the BCB to buy gold from local producers to replenish its international reserves, which currently stand at around 3.5 billion dollars. The Arce government justifies the sale of gold reserves as a means to cushion fuel prices and alleviate the shortage of foreign currency in the financial system. However, the economist and academic Gonzalo Chávez points out that the decline in reserves began in 2014 due to “bad investments” by the state, which reduced reserves from $15.1 billion to the current $3.5 billion.
As a result, most banks have limited withdrawals to $300 per person per day, while the BCB has carried out several foreign currency sales to meet demand. The new law also seeks to strengthen Bolivia’s international reserves, which have been affected by exogenous causes such as the conflict between Ukraine and Russia, which has increased fuel import costs.