Bolivia has been increasingly turning to its gold reserves to address a shortage of foreign currency and to meet external obligations. In recent months, the Central Bank of Bolivia (BCB) has executed forward contracts on gold worth nearly $1bn, raising questions about the legal framework, transparency of operations and long-term implications for the economy.

Between May and August 2025, the BCB signed forward sales involving 5.4 tonnes of gold, which generated approximately $589mn, according to figures released by the institution. Additional operations earlier in the year lifted the total raised through similar mechanisms to around $916mn, as estimated by local analysts cited by Latin American Post. The bank’s controversial method consists of purchasing gold from small domestic producers in bolivianos, refining it, and using futures contracts with international institutions to obtain immediate liquidity in US dollars. Officials insist that the state retains legal ownership of the gold until the delivery date, characterising the contracts as hedged operations rather than outright sales.

The immediate effect of these operations has been an increase in foreign reserves. Central bank data showed that reserves rose to approximately $2.9bn, a development that allowed the government to continue paying external debt and importing fuel, as reported by El Deber. However, the contracts are scheduled to mature in 2025, when a new administration will be responsible for honouring them. This timing coincides with a major political change: following August’s elections, the long-dominant leftist Movement for Socialism lost its majority, and a presidential runoff between pro-business centre-right and right-wing opposition candidates will take place in October.

Legal and constitutional concerns have been at the centre of the debate. Bolivian legislation requires the central bank to maintain a minimum of 22 tonnes of gold in reserves. Critics argue that forward sales undermine this requirement by committing future deliveries even if the threshold is formally preserved. Former president and current candidate Jorge Quiroga has claimed that such operations are illegal and warned that central bank officials could face prosecution if reserves fall below the mandated level. The government, though, maintains that recent changes in the 2025 budget law authorised these measures without the need for legislative approval. Economists have questioned whether altering long-term obligations through a budgetary clause is constitutionally valid, noting that it raises uncertainty about the legal foundation of the transactions.

The structure of the reserves has also drawn scrutiny. A central bank report cited by El Deber indicated that as of August, the cash-strapped South American country held 24.12 tonnes of gold, of which 21.85 tonnes were deposited in foreign institutions including UBS, Deutsche Bank, Standard Chartered and ICBC. Only 2.27 tonnes were stored in domestic vaults. The Ministry of Economy has defended this strategy, stating that keeping reserves abroad provides both security and returns. But opposition lawmakers have requested verification of domestic holdings and argued that the lack of public oversight increases risks of irregular management.

Environmental and social impacts represent another area of concern. A significant portion of Bolivia’s gold production comes from small-scale and often informal mining in the Amazon basin. Reports have documented the use of mercury, deforestation and the involvement of organised crime groups in gold supply chains. The US Environmental Investigations Agency has linked Mexico’s Jalisco New Generation Cartel to gold extraction and mercury trafficking in the region, as reported by Trade Financial Global. Meanwhile, an explosion in April at a mine operated by rival groups killed five people, laying bare the risks associated with poorly regulated extraction. Analysts warn that central bank purchases, while providing producers with a stable market, may unintentionally encourage environmentally damaging practices.

The debate has also been shaped by historical comparisons. In 1985, then-president Víctor Paz Estenssoro faced hyperinflation but chose not to monetise the country’s gold reserves, relying instead on structural reforms, according to historical accounts reported by Infobae. In contrast, under the current administration, the approval of Law 1503 in 2023 allowed the central bank to sell or pledge significant volumes of gold, with more than 57 tonnes monetised in three years. Critics have argued that this represents a departure from earlier approaches that preserved reserves as a strategic asset.

Analysts agree that Bolivia’s reliance on gold forward contracts has provided temporary relief by averting default and ensuring debt servicing. However, as reported by multiple outlets, including Bloomberg, Infobae and El Deber, these measures place a massive burden on the next government, raise questions about compliance with domestic law, and risk encouraging environmentally harmful mining practices. The longer-term consequences will depend on whether the state can maintain the 22-tonne reserve floor, secure sufficient domestic production or external financing, and address the transparency deficits that have impaired recent operations.