Bolivia Revives Long-Dead US Alliance at Trump’s Florida Summit

The US welcomed Bolivia back to its sphere of influence last weekend by returning a family heirloom to President Rodrigo Paz: the golden cross his father, who was also president, gave to George H.W. Bush in 1990.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — The US welcomed Bolivia back to its sphere of influence last weekend by returning a family heirloom to President Rodrigo Paz: the golden cross his father, who was also president, gave to George H.W. Bush in 1990.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.The younger Paz is attempting to lead the South American nation out of an economic crisis and realign its foreign policy with Washington after two decades of a socialist government that favored China, Russia and Venezuela. Foreign currency reserves remain low, and inflation is stubborn at 17%.The White House has thrown its support behind the 58-year-old Paz, promising to work with the mineral-rich nation to remove barriers to investment. Donald Trump had his first face-to-face meeting with Bolivia’s president on Saturday at the Shield of the Americas summit in Doral, Florida, attended by Latin American leaders leaders from across the Western Hemisphere. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Paz, in turn, is seeking to revamp Bolivia’s finances with an eye on boosting foreign reserves while servicing its debt with international lenders. It’s a daunting challenge, even for a leader whose path to power has the feel of destiny — Bush had predicted that one day the US would give back the cross when one of the elder Paz’s children rose to the presidency.“There is a clear intention to open Bolivia to the world and the world to Bolivia,” Paz said in an interview. The president, who took office in November, said his administration is drafting new legislation on investment, hydrocarbons, mining and energy to attract foreign companies. Already, Elon Musk’s satellite Internet service Starlink has started operations in Bolivia, while others “are conducting market assessments and exploring potential investments,” he said. The country holds one of the world’s largest lithium deposits and significant mining and hydrocarbons potential, but a lack of investment in exploration helped drag its hydrocarbons exports to $1 billion last year from a peak of $6.6 billion from 2013 to 2014. That’s contributed to an economic crisis that the government is now trying to overcome by bringing in fresh dollars from multilateral lenders and private investment. Over the last few months, Paz’s administration has obtained foreign loans totaling more than $8 billion from institutions including $4.5 billion from Inter-American Development Bank; $3.1 billion from the Development Bank of Latin America and the Caribbean, known as CAF; $200 million from the World Bank; and $1 billion from Fonplata. Those agreements will require congressional approval.Paz said his administration will hold further talks with the World Bank, and mentioned future negotiations with the International Monetary Fund, from which Bolivia is seeking as much as $3.3 billion in exchange for structural reforms aimed at restoring growth and fiscal sustainability. “We are working with the IDB and CAF, and later we will likely engage in some form of process with the IMF,” he said. “But first we want to put the house in order.” New Monetary PolicyPaz said his government has made headway in stabilizing Bolivia’s economy, ending fuel subsidies that made gasoline and diesel among the cheapest in the region, while keeping a lid on social unrest. Diesel prices rose about 160% at the end of December. The end of subsidies is expected to generate savings of up to $3.5 billion this year, helping rein in the fiscal deficit. That will allow Bolivia to meet its foreign debt obligations, Paz said. Cash foreign reserves rose to $435 million at the end of February from $68 million when Paz took office in November.The measure also helped Bolivia address its distorted foreign-exchange market, in which a dollar shortage pushed many Bolivians to seek greenbacks in the unregulated parallel market. Last year, dollars were nearly three times as expensive in the parallel market as they were at the official rate. In addition, banks began allowing customers with $1,000 or less in their accounts to withdraw part or all of their savings in dollars, which wasn’t previously allowed. That’s helped restore trust, which is bringing people’s savings from “under the mattress” back into the banking system, Paz said. The president did not say when a potential devaluation could occur.

Meeting Debt ObligationsSo far, the Paz government has succeeded in persuading investors that the outlook is improving. Bolivia’s sovereign risk premium has fallen below 500 points from more than 2,000 in mid-2025, according to a JPMorgan index. Fitch Ratings also raised Bolivia’s credit rating from CCC- to CCC at the beginning of the year. Paz mentioned another refinancing of the country’s debt, but without elaborating. The government recently refinanced $4.6 billion in debt, exchanging short-term obligations for longer maturities. Bolivia faces debt payments of about $388 million this month for two Eurobonds maturing in 2028 and 2030, according to data compiled by Bloomberg. Roughly $130 million is owed to private creditors in March, which would be paid using central bank reserves, finance minister Jose Gabriel Espinoza said in an earlier interview. The remaining 65% of those bonds are held by Bolivia’s state-owned pension fund administrator Gestora and the central bank, giving the country some flexibility on repayment. “We will be able to meet our obligations,” Paz said. “Part of the certainty we are giving both to Bolivians and to those who have a financial relationship with the country is that we will honor our commitments, and we are doing so.”—With assistance from Zijia Song.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.