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Bolivia's banking issues are not tied to recent U.S. or Swiss turmoil

LEILA FADEL, HOST:

This next story is about another bank run in South America, in Bolivia. The banking problems there are particular to that country's economy and not tied to any of the recent turmoil in the U.S. or Switzerland. NPR's Carrie Kahn has this report.

CARRIE KAHN, BYLINE: An official with Bolivia's central bank walks the long line stretching three downtown blocks in La Paz. "How many dollars will you take?" she asks the worried customers.

LUISA ZAPATA: (Non-English language spoken).

KAHN: Luisa Zapata says she needs $6,000. A debt has now come due. There have been long lines at banks and exchange houses for weeks as foreign reserves in the Andean nation have nosedived. Zapata spent the night in this line.

ZAPATA: (Non-English language spoken).

KAHN: "It was really cold. I didn't have anything good to sleep on. And in the morning, it rained. And I got soaked," she says.

(CROSSTALK)

KAHN: Frustrations erupt when the bank official tells everyone the doors are closing and to try back later. Zapata says, now what? The man she owes wants his dollars now.

ZAPATA: (Non-English language spoken).

KAHN: "He's pressuring me. He won't leave me alone," she says. The current crisis is a far cry from the boom years, when Bolivia's foreign reserves were flush thanks to a large supply of natural gas. For nearly 20 years, the previous government of leftist Evo Morales and his party's successor used dollars to keep the exchange rate fixed and the economy stable, says Eduardo Gamarra of Florida International University.

EDUARDO GAMARRA: Not only were they using them to support the dollar, but they were using it for public investment, stimulating the economy so that it would grow, right? And especially after COVID, that worked. But it's unsustainable.

KAHN: Now natural gas reserves are drying up. And the cost of imports are high due to the Ukraine war. Bolivia's dollar accounts have shriveled from 15,000,000,000 in 2014 to around 3 billion now. Last week, the rating agency Fitch downgraded Bolivia's debt further into junk territory. Bolivia's finance minister, Marcelo Montenegro, took to state-run TV on Sunday to calm fears.

(SOUNDBITE OF ARCHIVED RECORDING)

MARCELO MONTENEGRO: (Non-English language spoken).

KAHN: "The economic outlook is stable," he said. "If it wasn't, then bread prices and transportation costs would be soaring," he added. But the government controls prices, keeping both low, says Bolivian economist Roberto Laserna. He says it's unclear how much longer, though, they can keep it up.

ROBERTO LASERNA: That, of course, will have a huge political cost because once the price of gasoline goes up, the price of transportation will go up. And every good, every service will go up as well.

KAHN: On the same day the finance minister insisted all was well, former President Evo Morales publicly disagreed.

(SOUNDBITE OF ARCHIVED RECORDING)

EVO MORALES: (Non-English language spoken).

KAHN: Morales told a group of party faithful things are not well economically. More state spending on the poor and elderly is the answer, he added.

(SOUNDBITE OF ARCHIVED RECORDING)

MORALES: (Non-English language spoken).

KAHN: But 42-year-old Marielle Cauthin needs help now - to the tune of $20,000.

MARIELLE CAUTHIN: (Non-English language spoken).

KAHN: "I've tried at exchanges houses. I waited seven hours at the central bank," she says. Like many in Bolivia, she has to pay her rent in dollars and two years up front.

CAUTHIN: (Non-English language spoken).

KAHN: "It's a big headache," she says. And she worries her country's banking troubles aren't going to get better anytime soon.

Carrie Kahn, NPR News.

(SOUNDBITE OF KENO AND TRISTAN DE LIEGE'S "REVERRING") Transcript provided by NPR, Copyright NPR.

Carrie Kahn is NPR's International Correspondent based in Mexico City, Mexico. She covers Mexico, the Caribbean, and Central America. Kahn's reports can be heard on NPR's award-winning news programs including All Things Considered, Morning Edition and Weekend Edition, and on NPR.org.