Social media outcry over a businesswoman's inability to recover her dollar deposits has intensified public discontent in Bolivia regarding the country's economic crisis and the banking sector's inability to return funds in dollars.
While national legislation permits such measures, recovering savings in local currency results in a loss of nearly 40%, as banks convert at the official rate of 6.96 bolivianos, while the market rate fluctuates between 10.50 and 12 bolivianos.
The Bolivian Commercial Code mandates that obligations in foreign currency be settled in the stipulated currency when legally feasible. If not possible, payments must be made in bolivianos according to current monetary regulations.
However, the existing currency regulations are largely theoretical. The official dollar exchange rate is significantly lower than the street rate, meaning accepting bolivianos leads to diminished savings.
The Financial System Supervisory Authority (ASFI) confirmed that banks are returning these deposits either partially or fully in bolivianos, attributing this to agreements between financial entities and consumers. ASFI states that in case of customer complaints, conciliatory hearings are organized, resulting in binding agreements.
For nearly two years, Bolivia has faced challenges accessing dollars. Following years of financial stability, the economy began to show signs of strain early last year. Gabriel Espinoza, an economic analyst and former director of the Central Bank of Bolivia (BCB), noted that in February 2023, the BCB ceased dollar provision to the financial system due to depleted international reserves, primarily from the collapse of the oil industry. Consequently, banks limited dollar transactions and began purchasing dollars from exporters at higher rates.
This led to a cascading effect: progressively, banks restricted international transfers, limited digital transactions in dollars, and imposed tighter withdrawal limits, culminating in uncertain availability. Meanwhile, the parallel dollar exchange rate increased, further devaluing the local currency.
In May, the Association of Private Banks of Bolivia (Asoban) acknowledged that exports are the sole source of dollar income and must be managed prudently. The banking sector expressed concern over ongoing assertions regarding foreign currency reserves, which only partially cover dollar deposits.
The situation for Bolivians abroad or traveling is even more challenging. Recent inquiries at two major banks revealed withdrawal amounts or card purchases are insufficient for basic needs in most countries, allowing only $100 to $200 monthly.
ASFI's ability to assist clients is limited by the lack of foreign currency, leading to maximum fee regulations for international transactions.
Espinoza expressed pessimism about the country’s economic future, citing three factors: high fuel import costs, declining agricultural production impacting exports, and rising inflation. He predicts worsening conditions by 2025, with increased dollar demand and reduced supply.
Surveys indicate that financial insecurity is the primary concern for Bolivians, driven by limited dollar access, rising prices, and prolonged fuel shortages. The nation has transitioned from an economic miracle with record growth and inflation control to struggling to secure necessary foreign currency, a challenge experts believe will be difficult to overcome.