Bolivia, meanwhile, is charting its own course financially by using its large gold reserves. According to the World Gold Council, in 2022 the country mined 26.5 tonnes of gold. Bolivia is facing the weakest credit rating in all of Latin America, according to Bolivia on the Edge by S&P Global. This dangerous state of affairs has led to increased worry over the country’s economic security.
That’s because the Bolivian government has already made some remarkably brave moves to guarantee the program’s solvency. Now they are using gold to play the financial backstop. To reassure the public, the Bolivian central bank has defensively bought up almost 24 metric tons of locally-produced gold. Since launching in May 2023, it has successfully monetized 44 tons. So far, these operations have brought in around $3 billion, adding significant liquidity into the nation’s finances.
In a bid to bolster its gold supply, the Bolivian government enacted a law in 2023, mandating that domestic gold producers sell to the central bank first. This requirement provides the central bank with direct access to gold produced by local miners. It does more than make their strategy to stabilize the economy politically palatable.
The central bank continues to refine the purchased gold abroad, specifically in Turkey, before liquidating the bullion for U.S. dollars. This novel approach ensures the government can service its growing debt burden while making investments in local mining operations.
Bolivia’s gold exports are facing a historic loss. In 2024, they cratered by 72 percent due to this effort. This rapid decline underscores the competing imperatives the country now must navigate to address rising domestic demand while engaging in an increasingly competitive international market. Yet Bolivia has an astounding 19 tonnes of gold stored abroad banks. This development further cements the country’s intention to wield gold as an invaluable financial sword.
The Bolivian central bank has emphasized its procurement strategy, stating that it “only acquires gold in the domestic market from legally established participants, registered and authorized by the competent entities.” By taking this approach, we are making sure that we are covering ourselves from all legal bases. It ensures trust is built with local gold producers too.
The head of a Bolivian organization remarked on the central bank’s flexible purchasing strategy:
“The central bank is interested in buying gold and it doesn’t care where it comes from.”
This remark highlights the desperate pace at which Bolivia is trying to shore up its economy with gold purchases.
This program is emblematic of a new and vibrant movement sweeping across the world. Consequently, central banks have recently started turning more to domestic sources for gold. By bolstering dependencies on local markets, Bolivia can better secure its financial base in the face of outside forces.
As Bolivia enters this new chapter of its economic story, the importance of gold to its financial strategy cannot be overstated. This has necessitated swift and bold actions by government and central bank alike to demonstrate their seriousness about austerity. These are moves to reduce dangers associated with the nation’s precarious credit rating.