Bolivia Economy on Knife’s Edge ahead of 2025 Polls

The Bolivia economy, once among South America’s most successful, is currently in crisis, beset by a severe shortage of U.S. dollars, declining gas production, and mounting debt levels. Dwindling foreign reserves has led to high inflation and fuel shortages, with citizens increasingly struggling to access basic goods. Against the backdrop of this worsening economic outlook, a failed military coup was launched in June, triggering a cycle of protests and strikes that continues to present.

These economic issues are further complicated by a political rift within the ruling Movement for Socialism (MAS) party, which has seen President Luis Arce and former President Evo Morales battling for control ahead of the 2025 elections. The resulting political instability has paralyzed the government’s ability to respond to the crisis, exacerbating an already dire economic situation.

 

Failed June coup attempt reflects wider dissent

On June 26, 2024, General Juan José Zúñiga launched an abortive coup attempt to “restore democracy,” ordering military forces to occupy the presidential palace in La Paz and demanding the release of political prisoners. The coup quickly collapsed after President Luis Arce confronted Zúñiga, resulting in the general’s arrest. In the aftermath of the coup attempt, Arce swiftly restructured the military, detaining other high-ranking officials to prevent further unrest and restore civilian control over the armed forces.

The coup was widely condemned both domestically and internationally, and served only to heighten instability in Bolivia’s fraught domestic politics. In particular, the incident underscores both the fragility of Bolivia’s democracy and the deep divisions within the ruling Movement Toward Socialism (MAS) party. It also reflects the broader economic crisis destabilizing the country, where ongoing protests and political infighting threaten Bolivia’s economic development and stability going forward.

 

The shifting fortunes of a highly resource-dependent Bolivia economy

Bolivia, a landlocked country in South America, gained infamy in the 1980s and 1990s as one of the world’s largest producers of cocaine. Since then, the government has worked to diversify the economy by shifting away from illegal drug production and focusing on natural resources such as oil, gas, gold, tin, zinc, lithium, and agricultural products like soybeans. Over the years, the general standard of living improved, primarily due to government subsidies funded by foreign reserves. However, these reserves have now been depleted, and the resulting economic strain is one of the key drivers behind the current unrest.

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