Daily Archives: July 8, 2011

Bolivian Economics 101, updated

1. Important signal was sent to the Latin American community of nations, as well as to the international cooperating agencies. Government has decided to comply with the Inter American Development Bank (IADB – BID in Spanish, www.iadb.org) requirement to increase its shares to continue to benefit from its services. An estimated $14.7MM will be disbursed over the next five years to meet Bolivia’s obligation as shareholder.


2. During 2010, Bolivian imports are expected to increase by at least one billion dollars, as compared with last year’s. As reported by the Bolivian Institute for Foreign Commerce (IBCE). As of May this year, imports total $2,628MM; total imports for 2010, were $5,300MM.


This record import figures, makes us more vulnerable to the economic cycles elsewhere. In addition, the current exchange rate from Bolivianos to US Dollars continues to “appreciate” our currency but makes us more vulnerable and non-competitive at the time we intend to export.

3. Gasoline stations were facing problems with the government. The latter has been closing down (cancelling their operating licenses) a few stations because they failed to issue legal invoices for their sales. Asosur, as the main organization for these stations, has met and decide not to go on strike for now. Asosur has decided to adjust the way they issue their invoices and will seek Human Rights and international organizations’ support for their cause. Another conflict relied on the newly signed contract for four-year operations, which some affiliates say they were forced to sign.


Conflict between Asosur and the government started when gas stations that were near international borders were accused of allowing contraband of gasoline and diesel. Bolivian gas/diesel prices are subsidized and considerably higher to our neighbors. As of today there are a handful of stations being closed down because they did not give official invoices, last one in Santa Cruz was because the employee forgot to give a n invoice for Bs20, less than three dollars. Last night, during PAT’s news program, around 20:25 they showed a public gas station in La Paz (owned and operated by YPFB) selling gasoline without giving any invoice. YPFB is the Bolivian State owned company that aims at “recuperating” most of the gas stations nationwide. It is double standard by the government, as they do audits and are very severe with private sector, but neglect to do with public operated gas stations.

4. Sugar prices: while the government assures that the price and sugar supply for local markets is not a problem. Sugar is found in the markets only by pounds and at a higher price, not Bs3.00 but Bs3.50, as reported by Pagina Siete for La Paz markets. There are some Government officials that persist on accusing speculation and lack of municipal control. Vice minister Victor Hugo Vasquez, considers that the national government should continue to monitor and control producers and municipalities should control market prices. He said there is no reason to have such increment in prices. He assured that this year’s sugar supply will be larger this year, given the credits granted to the sugar cane producers. Government also imported sugar to satisfy the demand.


In the meantime price at retailer level is higher than expected and also sold only by pounds. Larger, normal quantities of sugar are disappearing from the marketplace (kilo / “quintal”). Adam Smith’s “invisible hand” continues to operate the economics of this world, as the sun keeps on rising from the East…

5. Poultry prices: As with point 4 above, vice minister Vasquez requested vendors to lower the price of poultry. He mentioned a study being made that established the price at the market place should be Bs14 per kilogram. Two days ago, price was already higher than that; it ranged between B16.70 and Bs17 per kilo. Earlier this year, the price per kilo was at Bs12.50. Poultry producers reasoned that cold weather and winter shorter days cause a delay in growth; plus lack of food will cause a shortage in the supply of poultry.


And again…Adam Smith’s hand is still in force.