Bolivia’s Economy on the Brink
The country is at risk of a currency crisis as the government keeps a fixed exchange rate with no international reserves to support it.
Not long ago, Bolivia was considered one of the few macroeconomically well-behaved populist governments in the Western Hemisphere. But things have been different in recent years. The country has gone from its accelerated growth rate, improved income distribution, and international reserves accumulation path (which earned the praise of the IMF in 2013) to a nation with minimal reserves, distorted relative prices—with shortages of fuel, milk, bread, butter, and other essential goods—and a bloated public sector.On a brief visit to La Paz in August, I witnessed echoes of this new reality on...
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