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Bolivia’s international reserves plummet

RIO DE JANEIRO, BRAZIL – Bolivia closed last year with a 9.9% drop (US$524 million) in Net International Reserves (NIR). Financial assets fell from US$5.3 billion as of December 2020 to US$4.8 billion as of December 2021.

This drop, of 9.9%, is the least abrupt recorded in the last four years. In 2020 the decline was 18.4%, in 2019 27.7% (the sharpest recorded so far), and in 2018, it reached 12.8%, according to statistical information published by the Central Bank of Bolivia (BCB).

International reserves are a means of international payment whose balance increases or decreases due to the different transactions that the public and private sector carry out with the rest of the world: foreign trade and family remittances mainly in the current account of the balance of payments; disbursements and amortizations of foreign debt and foreign investment in the financial account.

In 2014, the highest point of reserves was reached with US$ 15.1 billion and from 2015 onwards, a progressive fall was recorded. In eight years, financial assets plummeted 68.6% (they currently represent almost a third of the amount reported in 2014).
In 2014, the highest point of reserves was reached with US$ 15.1 billion and from 2015 onwards, a progressive fall was recorded. In eight years, financial assets plummeted 68.6% (they currently represent almost a third of the amount reported in 2014). (Photo: internet reproduction)

Reserves currently represent 12.9% of the Gross Domestic Product (GDP) and cover seven months of the country’s imports. The International Monetary Fund (IMF) recommends at least three months to maintain an adequate level.

In 2014, the highest point of reserves was reached with US$ 15.1 billion and from 2015 onwards, a progressive fall was recorded. In eight years, financial assets plummeted 68.6% (they currently represent almost a third of the amount reported in 2014).

NIR are made up of reserves in gold (52.8%), foreign currency (34.7%), Special Drawing Rights (11.7%), and Position with the IMF (0.8%), according to statistical information from the BCB.

On July 7, 2021, the BCB reported that up to the first semester of that year, a process of “significant recovery” of international reserves was observed. “This positive trend is based on the performance of variables that make up the NIR such as the trade balance, family remittances, and foreign direct investment, among others.”

Until November 2021, the trade surplus was US$1.7 billion, and family remittances amounted to US$1.3 billion, according to official data from INE and BCB.

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