By: Marcelo Núñez Araúz economist
International reserves constitute the patrimony of every nation, its administration is in charge of the Central Bank of Bolivia, which is in charge of supplying resources to maintain economic and financial stability. In Bolivia in the last decade, several sectors have been favored through financing destined to channel different projects sponsored by the Central State.
Thanks to the “boom” of the prices of gas, minerals and non-traditional products, the reserves rise considerably, the year 2015 is the standard bearer totaling 15,123 million dollars, for those years the trade balance registers a surplus; that is, the value of exports exceeds that of imports, this surplus produces an increase in reserves, the opposite happens when the value of imports is greater than that of exports, there is a shortage of foreign currency, the Central Bank to cover said deficit withdraws resources by reducing reserves.
In the last six years, international reserves in Bolivia have suffered a drastic drop, according to official records as of December 2021 they total 4,752 million dollars, likewise the trade balance since 2015 begins to be in deficit.
According to monetary theory, two mechanisms are currently applied for exchange stability: the fixed exchange rate and the flexible exchange rate. The first, as its name indicates, remains constant, while the second is linked to the permanent game of supply and demand; If, for example, the demand for dollars exceeds what the Central Bank offers, the exchange rate must rise or depreciate and vice versa.
If we analyze what happens in the region, they all apply a flexible or floating exchange rate; while neighboring countries suffer the onslaught of inflation and devaluation, in Bolivia we are calm, the exchange rate has not changed since November 2, 2011, allowing the few currencies that cost so much to generate to vanish.
By: Marcelo Núñez Araúz economist
International reserves constitute the patrimony of every nation, its administration is in charge of the Central Bank of Bolivia, which is in charge of supplying resources to maintain economic and financial stability. In Bolivia in the last decade, several sectors have been favored through financing destined to channel different projects sponsored by the Central State.
Thanks to the “boom” of the prices of gas, minerals and non-traditional products, the reserves rise considerably, the year 2015 is the standard bearer totaling 15,123 million dollars, for those years the trade balance registers a surplus; that is, the value of exports exceeds that of imports, this surplus produces an increase in reserves, the opposite happens when the value of imports is greater than that of exports, there is a shortage of foreign currency, the Central Bank to cover said deficit withdraws resources by reducing reserves.
In the last six years, international reserves in Bolivia have suffered a drastic drop, according to official records as of December 2021 they total 4,752 million dollars, likewise the trade balance since 2015 begins to be in deficit.
According to monetary theory, two mechanisms are currently applied for exchange stability: the fixed exchange rate and the flexible exchange rate. The first, as its name indicates, remains constant, while the second is linked to the permanent game of supply and demand; If, for example, the demand for dollars exceeds what the Central Bank offers, the exchange rate must rise or depreciate and vice versa.
If we analyze what happens in the region, they all apply a flexible or floating exchange rate; while neighboring countries suffer the onslaught of inflation and devaluation, in Bolivia we are calm, the exchange rate has not changed since November 2, 2011, allowing the few currencies that cost so much to generate to vanish.
;
