(Bloomberg) -- Bolivia’s precarious financial situation worsened Friday, with Moody’s Investors Service downgrading its debt and congress failing to reach a deal to sell gold for much-needed dollars.

The South American country for weeks has been under pressure due to a shortage of foreign currency that has prompted Bolivians to line up daily outside the central bank in La Paz to withdraw greenbacks. 

The crisis deepened as Moody’s said low levels of foreign reserves threaten the country’s macroeconomic stability and may affect its ability to service debt payments. The ratings agency cut the country two notches to Caa1, on par with Nigeria, and placed it on review for further downgrades.   

A bill in congress that would have allowed the central bank to sell some of its gold reserves to give it a cash cushion failed to advance after more than seven hours of debate. 

“We are in crisis, that’s the truth,” said opposition lawmaker Walthy Egüez Paz. 

Bolivia’s government is committed to ensuring the country’s economic stability and servicing its debts, according to a statement from the Ministry of Economy and Public Finance published in response to the Moody’s downgrade. 

It’s unclear how much cash the central bank has left. The bank last reported holdings for Feb. 8, when $372 million of its $3.5 billion in reserves was in dollars. At the peak in 2014, reserves were above $15 billion. 

The central bank has intervened to keep the currency stable at near 7 bolivianos per dollar since 2008, which in recent years has meant burning reserves to prevent a devaluation. 

“The root of this textbook balance of payments crisis lies in an overvalued fixed exchange rate combined with persistent fiscal deficits,” EMFI Group Limited analyst Matias Bensousan wrote in a report Friday. “Authorities refuse to abandon the peg and continue to sell FX to defend the exchange rate, despite the currency crisis turning into a bank run.”

Bolivia made a $22.5 million coupon payment on its 2028 dollar bond this week, after the nation’s debt started trading at distressed levels.  

Money managers have ditched the bonds as the plunge in reserves raises concerns about its ability to keep making payments. The 2028 notes have fallen 22 cents to 59 cents on the dollar this year, pushing the yield to 17%, according to indicative pricing data collected by Bloomberg. 

Last week, Fitch Ratings cut Bolivia’s credit score, saying that the drop in reserves had prompted a “confidence shock.” S&P Global Ratings also put Bolivia on credit watch negative, a signal that the nation could be downgraded, due to dollar outflows and a current-account deficit. Both credit assessors rate the country as B-, one level higher than Moody’s score. 

(Adds comments from the Finance Ministry in the sixth paragraph)

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