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Bolivia sold $1 billion in gold this year but remains broke as its bonds collapse
Western gold price suppression policy doesn't seem to bother the government of another resource-rich nation that insists on being poor.
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Bolivia Running Out of Cash After $1 Billion in Gold Sales
By Oliver West
Global Capital, London
Wednesday, October 11, 2023
Bolivia is plunging into a balance of payments crisis amid a continued shortage of dollars, no recent official data on foreign currency reserves, and a hefty fiscal deficit.
Stirring the pot is former President Evo Morales, forced to flee the country in 2019.
Morales has fallen out with President Luis Arce, his old finance minister, and said on Sept. 24 that he would run for office in the 2025 election, as a result of what he sees as "attacks from the government."
Even after a precipitous drop in its dollar bond prices in the last month and although Bolivia has no bonds maturing until March 2028, investors are failing to see any value in its debt.
The approval of a so-called "gold law" this year has allowed the Bolivian central bank to sell some 17 tonnes of gold and raise just over $1 billion of cash since May 5. This eased earlier concerns about a $183 million bond maturity payment due on Aug. 22, which was duly made. It is also likely to have temporarily reversed a fall in international reserves that has caused demand for dollars to surge across the country.
But this has cut Bolivia's gold reserves from 43.5 tonnes to 26.1, according to a report from EMFI Securities published on Monday and -- by law -- the stock must not drop below 22 tonnes. The central bank stopped publishing weekly reserve data on Feb. 8 but analysts believe the situation remains perilous. ...
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