Bolivian senate approved the ‘Gold law’ aiming to strengthening the country’s foreign currency reserves. It is aimed at ensuring a stable economy in the pluri-national state.
The step was taken after a voting majority consensus with the gold producers, mining cooperative members, social and union organizations from different sectors and national legislators.
The new law will allow the central bank to buy raw gold from mining cooperatives in the country and convert it into gold currency or bars to trade on international markets. However, it is declared that the law is not a long- term solution to the sovereign’s declining reserves.
The approval of the “Gold Law” by Bolivia’s (B-/Caa1/B-) House of Representatives is a positive step towards providing liquidity to address a USD 183m August 2023 bond payment. However, the law is not a long-term solution to the sovereign’s declining reserves, they said.
Bolivia faces around USD 300m in principal and interest payments through August, including the USD 183m maturity of its 5.95% 2023 bond and around USD 100m in interest payments.
The report was that ‘The Central Bank's stock of foreign exchange reserves dropped significantly to USD 372m as of 8 February, from USD 709m at the end of 2022’.
Bolivia has gold valued at around USD 3bn now — plenty to cover future payments at this stage — but equally important is receiving multilateral loan support.
‘Bolivia’s legislature has already approved a EUR 200m (USD 218m) loan from Agence Francaise de Developpement (AFD) that is ready for imminent disbursement, while Bolivian authorities have stated that approximately USD 600m in loans from other institutions are pending legislative approval’. The Ministry of Finance is also in the process of negotiating a contingent credit line from Corporacion Andina de Fomento (CAF).
Bolivia has a rich lithium’ goldmine’ and which has not been much exploited.