LA PAZ
Bolivia faces potential debt default without securing additional funding, according to the President.
Bolivia, grappling with an economical crisis leading to public disorder, skirts the brink of defaulting on its loan payments unless new foreign financing is secured, asserts President Luis Arce in an interview with AFP.
"We aim to dodge default. We're intent on discharging our debt, but if we're without the resources?" the embattled leader states bluntly in his La Paz office.
Bolivia's international financial obligations amount to around $13.3 billion.
The primary creditors are the Inter-American Development Bank, the Development Bank of Latin America and the Caribbean (CAF), the World Bank, and China.
Arce has grappled unsuccessfully to persuade parliament to endorse new loans worth $1.8 billion from multilateral agencies.
By December, the nation needs $2.6 billion for fuel imports and foreign debt repayments.
"We're making the worst deal as a nation. Since we have external debt, you hand over the principal and interest to the creditor, and that outgoing cash flow is offset by the inflow of new disbursements from new debts. But that's not happening," said the President, voicing his frustration.
Arce has declined efforts to oust him amid the crisis characterized by a severe lack of foreign currency, fuel, and essential goods.
However, he has admitted he won't run for reelection in August.
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Bolivia grapples with an economic crisis, marked by social unrest, essential goods shortages, and a critical scarcity of foreign currency. The country grapples with high inflation, with the International Monetary Fund forecasting around 15.6% to 15.8% in 2025, more than double the government's estimate[2]. GDP growth is projected to be minimal, approximately 1.1%, signifying sluggish economic activity[3]. The fiscal deficit is funded increasingly by Central Bank loans, leading to a depletion of international reserves, further complicating the nation's financial situation[4].
In an open admission of the risks involved, President Luis Arce stated, "If we don't have the resources, we might default." The country depends on rolling over its debt—paying principal and interest using new loans—but this planned inflow of funds has ceased, putting debt payments in jeopardy[1]. Bolivia has not defaulted since 1984, but the current economic climate is depicted as the "worst deal as a nation" regarding external debt management[1]. Without new financing, the risk of default by year-end is substantial, contributing to continuing economic instability and public discontent[1].
In a nutshell, Bolivia under President Luis Arce faces a precarious financial situation with approximately $13.3 billion in external debt, a pressing need for $2.6 billion by year-end, and a high risk of default without additional funding. The government's inability to secure new loans amid inflation, dwindling reserves, and public upset aggravates the likelihood of default unless the financing gap is resolved promptly[1][2][4][5].
"The immediate need for Bolivia is securing new foreign financing, as the country's financial obligations total around $13.3 billion and they require $2.6 billion by the end of the year to avoid defaulting on their loan payments, as President Luis Arce admits."
"Without new financing, the risk of default by year-end is substantial for Bolivia, given the nation's critical financial situation and its heavy external debt burden, posing a continuous threat to economic stability and public discontent."
