From Boom to Bust: How Bolivia’s Oil Wealth Evaporated Under Socialism

(Analysis) Bolivia’s oil revenue plummeted to $1.635 billion in 2024, the lowest figure since 2007, marking a sharp decline of $349 million from 2023.

The state-owned hydrocarbons company, Yacimientos Petrolíferos Fiscales Bolivianos (YPFB), announced this grim milestone amidst a broader economic crisis fueled by years of declining natural gas production and insufficient investment.

YPFB President Armin Dorgathen warned that 2025 revenues could fall further to $1.5 billion. This decline follows Bolivia’s decision to cease natural gas exports to Argentina after a long-standing contract expired.

This collapse highlights the failures of Bolivia’s socialist economic model, which has relied heavily on resource extraction while neglecting reinvestment in production. Oil and gas revenues, once a pillar of Bolivia’s economy, peaked at $5.49 billion in 2014 but have since been in freefall.

Natural gas production dropped from 60.8 million cubic meters per day (MMcmd) in 2014 to just 31.9 MMcmd in 2023. This decline has forced Bolivia to become a net importer of fuel, with subsidies keeping domestic prices artificially low at one-third of regional averages, further straining public finances.

The economic consequences are severe. Public debt surged to 84% of GDP by the end of 2023, while foreign reserves dwindled to $1.7 billion—just one-tenth of their 2014 peak.

Bolivia’s Economic Crisis

Inflation remains low due to price controls, but these measures have created fiscal imbalances and exacerbated fuel shortages. Long lines at gas stations and restrictions on dollar withdrawals reflect a worsening crisis that has paralyzed the economy.

Political instability compounds the problem. The ruling Movement for Socialism (MAS) party faces internal divisions between President Luis Arce and former leader Evo Morales. These divisions are weakening governance ahead of the 2025 elections.

A failed coup attempt in June 2024 further highlighted the fragility of Bolivia’s democracy. YPFB plans to invest $500 million in exploration and exploitation in 2025 to reverse the decline.

This follows insufficient investments of $281 million in exploration and $225 million in exploitation in 2024. However, experts remain skeptical about rapid recovery, citing depleted reserves and reduced export markets in Brazil and Argentina.

Bolivia’s economic turmoil underscores the risks of over-reliance on resource extraction without reinvestment or diversification. The socialist policies that once fueled growth now threaten to push the country into deeper financial and political instability.