(Bloomberg) -- Bolivia’s dollar bonds fell the most in nearly six months after socialist former President Evo Morales said he’ll run in the 2025 presidential election, adding to uncertainty in a nation where investors are already fretting about dwindling gold reserves. 

The country’s most-liquid notes, due in 2028, plunged more than 2 cents on the dollar to around 58 cents Monday, one of the worst performances in emerging markets. The bonds had already been dropping in recent months as the central bank sells gold to prevent the currency from weakening. 

Bolivia’s current president, Luis Arce, served as finance minister for much of Morales’s 14 years in office, but relations between the two have soured in recent years. The ruling socialist party is now split between Arce supporters and those loyal to Morales, with each side accusing the other of graft. 

Morales, 63, announced his planned candidacy on the social media platform X on Sunday. In his statement, Morales accused Arce’s government of seeking to sideline him politically, including by falsely implicating him in corruption. 

Arce, 59, a UK-educated economist, is widely regarded as being less radical than his mentor, and more open to foreign investment.  

Arce won the 2020 election in a landslide with Morales’s backing, and many Bolivians had assumed that the former president would exercise a lot of influence over his protege. But Arce refused be anyone’s puppet and rejected some of Morales’s requests on topics such as ministerial appointments, and the two fell out. 

Worst Performers

Bolivian bonds have handed investors losses of more than 17% this year, the worst performance for sovereign debt in the developing world, according to a Bloomberg index. 

The nation has been heading for trouble since prices dropped for its natural gas exports in 2015, turning a current account surplus into a wide deficit and forcing the central bank to spend its reserves to defend the currency peg of about 6.9 per dollar. 

“The country has been heading into a perfectly predictable balance of payment crisis in slow motion,” said Carlos de Sousa, an investor at Vontobel Asset Management AG in Zurich.

The country was hit by a financial panic in April when the central bank virtually ran out of dollars. The crisis eased after a change in the law made it possible for the bank to sell its gold reserves, but markets were alarmed by a report this month that showed the bank was down to its last 26 tons of the metal, down about 40% from April. 

Read More: Gas-Rich Bolivia’s Bonds Hit New Lows as Dollar Reserves Dwindle

Some investors are losing confidence in the country’s bonds, according to EMFI Group Ltd, which recently changed its “hold” recommendation on the country’s sovereign bonds to “sell.”

Although a default isn’t likely in the short term, the current yield isn’t attractive enough given the risks, EMFI’s strategist Matias Bensousan wrote in a September note.

--With assistance from Sergio Mendoza.

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