Bolivia’s Instability: Risks for Investors and Households

Bolivia is facing heightened political risk due to economic challenges and instability. Key issues include a US dollar shortage, a black market with inflated currency rates, declining gas revenues, limited public resources, and persistent fuel shortages leading to long queues for diesel. Internal divisions within the ruling MAS party and Congress complicate policy approval, worsening the instability. This discord is underscored by a controversial June military coup attempt, seen by some as a self-coup to boost government popularity. Additionally, sectors like transport unions have pressured the government to address the economic crisis through road blockades demanding reforms and ministerial dismissals. This analysis considers how these factors are likely to undermine investor confidence, particularly in the lithium industry, and threaten recent progress in poverty reduction and vulnerability alleviation.