The Economy of Bolivia
The 1985 Hyperinflation and Shock Therapy
Bolivia suffered one of history's worst hyperinflations in the mid-1980s and ended it with a sudden liberal reform package.
A dramatic stabilisation.
Crisis
Inflation reached tens of thousands of per cent a year in 1985 amid falling tin prices and debt.
Decree 21060
The government freed prices, cut the budget deficit, floated the currency and fired tin miners.
Result
Inflation collapsed within weeks.
Cost
Unemployment and social hardship rose, and many miners lost jobs.
A new currency
The old peso was replaced by the boliviano, worth a million pesos.
Believing stabilisation had no social cost
It hurt many workers.
Key takeaways
- Hyperinflation peaked in 1985.
- Decree 21060 stabilised prices.
- The boliviano replaced the peso.
- Costs were borne by workers.
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