Bolivia reopens dollar accounts to recover $4bn hoard

Bolivia is reopening dollar bank accounts and guaranteeing that new deposits will never be frozen again, aiming to lure an estimated $4 billion in hoarded cash back into the financial system. The initiative is a direct response to a 2023 dollar shortage that forced banks to lock savers out of roughly $2.5 billion in deposits. For foreign investors, the success of this policy will serve as a key barometer of whether President Rodrigo Paz, who took office in late 2025, can restore credibility to Bolivia's financial institutions.

The cash exodus was driven by structural economic collapse. Years of declining natural gas exports drained national reserves from over $14 billion to just $3.6 billion, mostly in gold, by late June. As dollars vanished, banks could not meet withdrawal requests and inflation surged to its worst level in four decades. Bolivians responded by pulling money out of the formal system and holding physical dollars, a traditional hedge that accelerated during the crisis.

Market reforms

The deposit recovery effort hinges on a landmark shift in macroeconomic policy. In late June, Bolivia abandoned a fixed exchange rate that had held since 2011, allowing the boliviano to float at roughly 9.73 to the dollar. The currency shift was paired with the removal of a financial transaction tax that had penalized dollar depositors and driven remittances into the informal market. The roughly $1 billion in annual remittances can now be collected through banks at market rates.

Restoring trust requires concrete repayments. Starting July 15, savers with frozen balances between $1,000 and $3,000 can begin withdrawing funds. This is the latest phase of a plan to return $933 million to households by 2027, with officials targeting a full lifting of all dollar account restrictions by 2028.

The central bank is also moving to rebuild its own buffer. It plans to purchase up to $200 million per quarter through public auctions. External support is poised to arrive in the form of a roughly $3 billion financing program from the International Monetary Fund, which is finalized and awaiting a government signature.

The multi-year timeline for unfreezing all accounts will test the patience of a populace burned by the recent crisis. However, reversing the dollar shortage is essential for stabilizing the newly floated currency and resuming critical fuel imports. If the guarantee holds, Bolivia could rapidly ease its liquidity crunch; if it fails, the informal dollar economy will only tighten its grip.