Currency crisis and political upheaval collide as Bolivia swaps economy ministers

The dollar in Bolivia is brushing against the all-time highs reached last July, and that figure only takes on its full significance when placed alongside what unfolded this week on the political front: the Legislative Assembly censured Economy Minister José Gabriel Espinoza, President Rodrigo Paz removed him immediately, and within hours appointed Christian Andrés Morales Burgos as his replacement. It is the convergence of an accelerating currency crisis and a political rupture at the very top of economic management that defines the current moment in Bolivia: not an isolated problem, but a perfect storm in which the navigation instrument has just changed hands.

The legislative censure of Espinoza, approved by the Plurinational Legislative Assembly after his initial refusal to appear before the chamber, played out against the backdrop of a 29-question agenda grouped into four thematic areas covering fiscal management and the foreign exchange crisis. His departure was not a surprise in terms of political wear and tear, but it was in terms of timing: the Paz administration is only a few months into its term and has already burned through its first Economy Minister in an environment where every signal of institutional instability translates directly into pressure on the exchange rate. With Morales Burgos sworn in and Óscar Mario Justiniano having covered the post on an interim basis in the interval, President Paz himself publicly asked the new minister to "change course" on the country's economy — an instruction that sounds like implicit acknowledgment that the previous course was unsustainable.

The currency market reflects that accumulated pressure with precision. According to El Deber, the dollar is brushing against the peak recorded last July, a level that at the time triggered widespread alarm. The Banco Central de Bolivia (BCB) came out to contain expectations, insisting it has enough "backing" to neutralize shocks and prevent the exchange rate from climbing to Bs 15 or Bs 20, and the Central Bank itself is evaluating whether to stop buying gold on the domestic market in order to convert reserves directly into dollars, according to Los Tiempos. In parallel, the government authorized withdrawals of up to 3,000 dollars from the financial system and normalized remittance transfers, measures aimed at easing pressure on informal dollar demand but which also acknowledge the magnitude of the liquidity problem the country is dragging along. The decree issued by President Paz to relax the rules for financial institutions and safeguard their solvency fits the same logic: the banking system is under unusual strain, and the sector's earnings are already showing a 58% collapse due to loan deferrals.

Fuel is the other critical knot. Decree 5676, which set the price of diesel at Bs 18 per liter, triggered a chain reaction that has yet to dissipate. Three sectors have announced blockades and marches rejecting the measure, agricultural producers set Monday as the deadline for its repeal, and localities such as Yapacaní established their own 48-hour ultimatums. The government, for its part, ratified that it will not repeal the decree, although new minister Morales is weighing adjustments. Meanwhile, the tanker truck sector, which staged a strike that threatened to cut off nationwide fuel supplies, signed an agreement with the government to suspend the protest measure after mediated dialogue. The president of Cainco warned that the existence of two prices for diesel — subsidized and market — directly incentivizes the black market, a distortion that does not disappear with the decree but rather migrates into informality. The industrial sector, meanwhile, was categorical: the subsidy must not return, but neither should the blockades, because their economic cost is devastating. The data back this up: in the poultry sector alone, losses exceeded 400 million dollars during the 2024 blockades, and according to the Federation of Private Entrepreneurs of Cochabamba, cumulative blockades in just five months of 2025 already exceed the total damage recorded throughout the entire previous year.

The fiscal picture aggravates the diagnosis. State-owned enterprises have accumulated Bs 8.1 billion in tax debt, according to El Deber, while an investigation by Los Tiempos documents that the state companies created during the MAS government lost Bs 4.058 billion over 16 years. Current government spending grew 43% in a decade, against an increase of just 28% in revenues — a gap that cannot be sustained without external financing. Against this backdrop, the IMF approved a 1.9 billion dollar credit for Bolivia, and the Central Bank has already secured an extraordinary line of credit in favor of the Ministry of Economy. Five companies are competing to supply fuel to the country in 2026, suggesting that the transition toward an import model without massive subsidies is underway, though the political calendar and social resistance make it politically costly.

What to watch closely in the coming days is new minister Morales's stance on the diesel decree and his ability to negotiate with the agricultural sector before Monday's deadline expires. Any concession that implies backtracking on the liberalization of fuel prices would be interpreted by markets as a signal of fiscal weakness, with direct consequences for the exchange rate. In parallel, the BCB's willingness to convert reserves into dollars and the evolution of operations under the new flexible exchange rate regime will determine whether the quotation can stabilize below the July highs or whether Bolivia is approaching a new rung in its currency crisis. Country risk, which according to eju.tv remains below Argentina and Ecuador, is the last credibility buffer the country cannot afford to lose.