Bolivian Central Bank Is Rebuilding Reserves, Finance Chief Says

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(Bloomberg) — Bolivia’s central bank is rebuilding its international reserves as it deals with a “transitory” liquidity problem affecting the country, according to Finance Minister Marcelo Montenegro.

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The minister declined to elaborate on what the current level of reserves was, but said it had increased recently. The central bank board can decide to withhold the data to avoid creating “more speculation,” he said.

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“They’re replenishing them,” Montenegro said in an interview on the sidelines of the International Monetary Fund’s spring meetings in Washington. “The central bank is the only institution that can publish those figures.”

Bolivia’s foreign reserves have been on a long downward trend since 2014 as the once gas-rich nation gradually turned into a net energy importer, forcing the central bank to spend reserves to defend its currency peg of close to 7 per dollar.

Bolivia had $3.5 billion in reserves as of Feb. 8, of which $372 million was in cash, according to the bank. The authorities stopped publishing the data two months ago as reserves dropped toward critical levels.

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In recent weeks, Bolivians have formed large lines outside the monetary authority’s building in La Paz as dollars run low in banks and currency changing shops. President Luis Arce this week ruled out a currency devaluation.

The Andean nation is considering offers from multilateral lenders including the Inter-American Development Bank, for a $300-500 million contingency line, and regional Corporacion Andina de Fomento, for a $400 million contingency line, Montenegro said.

The government hasn’t approached the IMF, he said. The recent plunge in the nation’s dollar bonds makes it virtually impossible for the government to access global financial markets.

Read More: Financial Chaos at 12,000 Feet: Dollars Are Vanishing in Bolivia

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In recent weeks, the country has almost exhausted lines of withdrawal with the IMF called Special Drawing Rights.

That means that most of the central bank’s remaining reserves are now in gold, which the authorities can’t sell without approval from congress. Montenegro said he’s confident lawmakers will soon approve a law that would allow the bank to convert bullion into dollars.

In March, Fitch Ratings and Moody’s Investors Service cut Bolivia’s credit rating on fears that its dwindling reserves may affect its ability to service its debt.

The extra yield over US Treasuries that money managers demand to hold the nation’s debt has ballooned to nearly 20 percentage points, well over the threshold to be considered distressed.