Bolivia's Economic Warning: 80% of Fiscal Deficit Financed by Central Bank Loans

Bolivia Faces Inflationary Crisis as Fiscal Deficit Fueled by Central Bank Loans LA PAZ, BOLIVIA – A recent interview with Gabriel Espinoza, the economic leader of the Unidad alliance, has shed light on a critical economic situation facing Bolivia. Espinoza warns that over 80% of the country's fiscal deficit is being financed through loans from the Central Bank to the National Treasury. This practice, he argues, is creating a dangerous inflationary spiral. "In a country that is producing and exporting less," Espinoza explains, "each peso issued without productive backing becomes an inflationary peso." This statement underscores the gravity of the situation, highlighting the unsustainable nature of relying on Central Bank loans to cover the fiscal deficit. The interview underscores the urgent need for alternative solutions to address the fiscal deficit. Failure to do so, Espinoza warns, will inevitably lead to further economic hardship for the Bolivian people. The situation serves as a stark reminder of the importance of sustainable economic policies and responsible fiscal management. The Unidad alliance, to which Espinoza belongs, is advocating for a more sustainable approach to fiscal management, urging the government to explore alternative funding sources and implement measures to stimulate economic growth and increase production. The situation is being closely monitored by economists and policymakers, and the coming weeks will likely see further developments in the ongoing effort to address Bolivia's economic challenges.