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• Arces’ chances of reelection are cooling as inflation rises and Bolivia’s economy falters.
• Arce’s political struggle with Evo Morales has fractured his ruling party MAS, weakening his ability to govern. 
• The 2025 Bolivian presidential elections could bring increased political turmoil, potentially empowering opposition factions to the current government. 

Why is ARCE COLD?

Answer: Arce is cooling as it becomes increasingly difficult  to manage the country’s economic downturn while rising tensions with Morales threaten his chances for reelection. 

Luis Arce began his presidency in 2020 with strong popular optimism for a post-pandemic recovery, building on his tenure as Minister of Economy during Bolivia’s so-called “economic miracle years“. From 2006 to 2019, he became a key figure of Latin America’s left, known for his balanced fiscal management and a model that combined state intervention with private sector growth. 

However, Bolivia is now facing a worsening economic crisis, with rising inflation and soaring prices that Arce has been unable to contain. The country’s GDP growth has decreased to 1.6% in 2024, while inflation has reached 13,23% in February 2025. . This has sparked growing dissatisfaction among Bolivians, especially within the core working-class base of Arce’s party, the Movimiento al Socialismo (MAS), leading to widespread protests and roadblocks that have paralyzed parts of the country.

A growing power struggle with former President Evo Morales has further eroded Arce’s popularity and credibility. Once close allies under MAS, they are now locked in a rivalry, as both are competing for the leadership of the party. This has caused a split in its political base in two parties: Morales’ loyalists (Evistas), who control the Senate, and Arce’s supporters (Arcistas), who hold the Chamber of Deputies. 

Without a majority in the legislature, Arce is struggling to advance the legislative process, thus blocking crucial economic measures. Although Arce secured over $1 billion in international loans,  opposition parties and Morales’s faction within MAS have yet to approve them.

Without these funds, Bolivia is experiencing foreign exchange shortages that have disrupted domestic fuel production, which can no longer meet national demand. As a result, the country is forced to import 86% of its diesel and 56% of its gasoline. This inaction is eroding trust in Arce’s government, fueling protests and increasing tensions as elections approach.  

What is changing Arce’s heat level?

Answer: Arce’s economic policies have failed to improve the economy while Morales’ resurgence hinders his administration’s ability to govern effectively.  

Bolivia’s ruling party, MAS, began to split when Morales ran for a fourth term in the 2019 presidential election, despite constitutional limits. Although he claimed victory, allegations of electoral fraud led to widespread protests and ultimately forced him to resign and flee the country. 

MAS later regrouped under Luis Arce, who won the 2020 election. At first, his victory seemed to restore unity, divisions within MAS resurfaced when Evo Morales returned from exile, challenging Arce for the party leadership.

The growing opposition from Morales’ supporters has made it harder for Arce’s government to pass laws. Additionally, judicial elections that were supposed to take place in December 2023 were postponed by a year due to internal political disputes within MAS. In an effort to avoid a legal crisis, judges extended their terms, which sparked protests. 

Moreover, Arce’s economic policies have intensified the economic challenges. In 2023, Bolivia’s fiscal situation deteriorated, with the deficit nearing 11%of the country’s GDP, the highest under Arce’s presidency and the worst since MAS took power in 2006. This continues a decade-long trend of widening deficits, primarily financed through increasing public debt, and relying heavily on central bank credit. This strategy has led to the depletion of international reserves to less than $2bln in 2024, foreign exchange restrictions and the growth of a black market, where foreign currency is priced at nearly double the official rate. 

Meanwhile, his price controls on essential goods have placed additional pressure on small businesses, which are already struggling with rising costs and shrinking profit margins.

What is driving Arce?

Answer: Arce seeks re-election, economic stability and to counter Morales’ influence through judicial alignment and enforcing term limits. 

President Luis Arce is seeking re-election in 2025. However, his political future is closely tied to diminishing Morale’s influence and stabilizing Bolivia’s economy.   

With Bolivia’s legislature deeply divided and Morales still exerting considerable influence, Arce faces significant challenges in advancing his policies, as he cannot rely on the support of all MAS legislators. The fractured state of the legislature leaves Arce with limited options, and judicial control has become an alternative means for him to advance his agenda, including through legal cases against Morales and enforcing term limits to block him from running again. 

In November 2024, Bolivia’s constitutional court barred former President Evo Morales from running for elected office, officially preventing him from contesting the 2025 presidential election. Since taking office, amid a deep recession and a global pandemic, Arce has repeatedly promised to end fuel shortages and lower the prices of essential goods. 

To address these challenges, Arce’s administration has focused on international partnerships, particularly with Russia and China, to attract investment in oil, gas, lithium, steel, and biofuels. Once a major energy exporter thanks to its abundant natural gas reserves, Bolivia now relies heavily on fuel imports as domestic production declines. With no significant new gas discoveries, production has fallen by half compared to its peak a decade ago, while oil production has dropped to its lowest levels since the 1990s. Arce is thus restructuring Bolivia’s import strategy by securing direct and more affordable fuel purchases from OPEC member nations and other suppliers through its state-run trading firm, Botrading S.A.

What does this mean for you?

Answer: The upcoming elections may be marked by increasing turmoil creating opportunities for opposition parties to challenge the current government. 

Bolivia is heading into the 2025 elections with significant political uncertainty, sparking fears of turmoil similar to 2019, when protests have erupted among the population, engaging in violent clashes with riot police in response to the perceived elections fraud. 

In 2024 alone, demonstrations linked to Morales’ supporters resulted in severe economic damage, with losses estimated at 4 billion dollars, nearly 3.5% of Bolivia’s GDP. Morales’ decision to join the center-left party Frente para la Victoria (FPV), and run as their sole candidate for the presidency despite a constitutional ban, could further inflame political tensions, exacerbate social unrest and prolong economic instability.  

Moreover, the military’s role in Bolivia’s political crisis remains a significant factor to monitor.  Ongoing political and judicial instability could create conditions for military intervention, as demonstrated in June 2024 when former army commander Juan José Zúñiga attempted to seize power, claiming he aimed to “restore democracy”. Though the coup attempt was quickly suppressed, it signaled a potential resurgence of military involvement in Bolivian politics. 

At the same time, the fractured state of MAS has created an opportunity for opposition groups from the liberal and conservative factions to challenge its two-decade hold on power. On December 18, 2024, key right-wing leaders—including former presidents Carlos Mesa and Jorge “Tuto” Quiroga, businessman Samuel Doria Medina, and representatives of jailed Santa Cruz governor Luis Fernando Camacho—announced plans to form a united opposition front.