By Aurora Lane | 2025-03-19

LA PAZ -- The Bolivian fuel shortage, driven by the country's dollar crisis, has forced President Luis Arce's administration to implement measures reminiscent of those used during the COVID-19 pandemic.

As Bolivia grapples with an escalating energy crisis, the government has acknowledged it cannot resolve the issue quickly.

On the night of March 12, Arce addressed the nation, announcing 10 measures to reduce fuel demand but without providing a clear timeline for ending the crisis.

Bolivia has struggled with diesel and gasoline shortages for over a year, but the situation worsened in early March when the government admitted it could no longer meet fuel demand because of a lack of foreign currency.

Entorno consulted analysts who emphasized that Arce's "pandemic measures," including virtual classes, remote work and reduced public transportation, mirror the actions taken in 2020 to address the COVID-19 crisis. They severely affected Bolivia's economy.

"These are measures reminiscent of the pandemic era, with remote work, extended hours and special schedules for the education sector, as though we're being told this is the new normal," said Luis Romero, president of the Tarija College of Economists, in an interview with Entorno.

These government actions are "palliative" rather than structural solutions, said Romero.

The core issue

Bolivian businessman Branko Marinkovic, a former economy and finance minister, expressed his discontent on his X account.

Arce's "COVID measures" do not provide a real solution to the ongoing crisis, he said.

"The only response from this inept government is to lock people down, just like during the pandemic. Instead of offering real solutions, these ineffective communists are capable only of imposing stopgap measures: workers trapped in their jobs and students confined to virtual classrooms," he wrote.

In recent days, long lines of vehicles have formed at gas stations across Bolivia. The agricultural sector is warning of a potential food crisis due to a shortage of diesel needed for the summer harvest, and multiple sectors have already declared a state of emergency.

None of the proposed measures addresses the core issue: the lack of dollars to import fuel, the sources say.

The Andean country's dollar shortage stems primarily from its rapidly declining international reserves, which have plummeted from $15 billion in 2014 to just $1.8 billion in 2024, according to the Central Bank of Bolivia (BCB).

This depletion has led to a scarcity of dollars in the domestic market and worsened the country's risk profile with international rating agencies.

Rather than cut public spending, the Arce administration has upheld costly fuel subsidies and funneled more funds into state-owned enterprises -- many of which operate at a deficit.

Limited options

The 10 measures announced by the government have faced strong criticism from various sectors.

"Arce is merely restricting demand, which will further shrink the economy and push us into a situation similar to the pandemic," Alvaro Rios, a former minister of hydrocarbons, told Entorno.

On March 14, Arce suggested that the dollar shortage could be resolved with the approval of $1.6 billion in loans under review in Congress. However, given the divisions within the ruling party, approval of these loans seems unlikely anytime soon.

"Now the Arce government has limited options. The only remaining course of action until November (when his term ends) is to secure financing, whether from external or domestic sources, with the latter likely to be the preferred route," said analyst Romero.