Bolivia’s energy crisis, driven by dwindling natural gas reserves and a severe dollar shortage, prompts fears of an exodus of over 1 million Bolivians to Peru. According to Gas Energy Latin America, Bolivia could run out of sufficient natural gas to meet domestic demand by 2028. Bolivia’s gas production has fallen from 60 million cubic metres per day (Mcm/d) in 2015 to 37 Mcm/d in 2023, significantly affecting exports and government revenues, which rely on hydrocarbons for nearly 30% of income.

Bolivia’s natural gas reserves, which peaked at 10.45 trillion cubic feet (Tcf) in 2009, have significantly dwindled due to underinvestment and mismanagement, with reserves now estimated at just 5.1 Tcf in 2023. “The projections that natural gas is running out are absolutely true and it has been happening very quickly in the last two years,” stated a former vice-minister of hydrocarbons.

Production is projected to fall below domestic demand by 2024 (expected to reach 16 Mcm/d). Additionally, Bolivia’s inflation is rising, exacerbated by a severe dollar shortage, leading the central bank to ration dollars. “The biggest problem of having less and less gas to export is that it means the depletion of the country’s dollar reserves,” explained the former vice-minister. “The lack of revenues (which dropped from 6 billion in 2014 to 2 billion in 2023) is causing the country to run out of Diesel.” The hydrocarbon vice-minister stated, “The Legislative Assembly wants to live on borrowed dollars, but that is impossible!”

“The lack of revenues (which dropped from 6 billion in 2014 to 2 billion in 2023) is causing the country to run out of Diesel.”

Former vice-minister of hydrocarbons, Bolivia

As a result, “the exodus of Bolivians is a real risk,” acknowledged the former vice-minister, but according to a Bolivian official, “the exodus of Bolivians has already begun.” In 2023, over 100,000 Bolivians emmigrated to Peru, with projections suggesting that 1 million Bolivians may consider emigration soon. This mass migration is expected to exacerbate existing economic problems, contributing to a 10% reduction in the labour force, which could lead to a 2% decline in GDP growth over the next few years.

Historically, Bolivians have migrated to Argentina, Brazil, Spain and the US during past crises (especially in the 1990s). Spain recently saw another surge in Bolivian migrants who arrived on tourist visas and overstayed, seeking work. The Bolivian official confided, “I have it on good authority from the Spanish Embassy that European countries are worried because many people have gone to Spain as tourists in recent months and have not returned.”

The economic crisis also draws attention from multilateral organisations, especially in Washington. The official based in Washington DC expanded, “Due to the fall in gas exports, which was the only viable alternative, a very complicated collapse is coming.” Two years ago, international organisations had proposed a financial aid package to Bolivia, but the government, led by President Luis Arce, “has not taken a single measure.” The gap in Bolivia’s economy, exacerbated by dwindling gas revenues, is expected to worsen, with a USD 6 billion shortfall by 2028. If Argentina ceases to buy Bolivian gas next month, as expected, the situation could deteriorate even further.

“Due to the fall in gas exports, which was the only viable alternative, a very complicated collapse is coming.”

Bolivian official at a multilateral organisation in Washington

The outflow of people risks disrupting family structures, with 200,000 Bolivian children potentially affected by parental migration. The current crisis could deter foreign direct investment (“FDI”), with potential declines of 30% in inflows as investors become wary of Bolivia’s investment climate.

The draft law from Bolivia’s Ministry of Hydrocarbons and Energy, aimed at boosting private sector investment in hydrocarbon exploration and exploitation, is expected to be introduced to the legislature in late 2024 or early 2025. “Experts from the Ministry of Hydrocarbons and YPFB [Bolivia’s state-owned oil and gas company] warned the authorities many times.” The former vice-minister of hydrocarbons elaborated, “but exploration continued through YPFB and the result is that nothing was found, only more than 1 billion dollars in loans from the Central Bank to YPFB for this exploration.”

The ruling Movement for Socialism (“MAS”) party, led by President Luis Arce, faces internal divisions regarding foreign investment in Bolivia’s natural resources. Historically, MAS has been rooted in a solid nationalist and anti-neoliberal stance, particularly regarding Bolivia’s natural resources, which were nationalised under former President Evo Morales in 2006.

“I don’t see a single initiative at the moment to open these sectors to foreign investment. Not a single politician has this on their agenda,” stated the former vice-minister of hydrocarbons. “Fundación Milenio presented a proposal, but it is ultra-liberal. It is wishful thinking. It is impossible for this to be approved in a country like Bolivia.” The Bolivian official at a multilateral organisation in Washington DC concluded, “It is necessary to change the regime established by its famous nationalisation law that scares away any investment. President Arce still wants to show that his model works, but it will be a disaster for the whole region because the fall will be extreme.”