Businessmen fear effects of the falling dollar exchange rate

Businessmen fear effects of the falling dollar
Bolivian private entrepreneurs have warned that the continuing fall in the value of the dollar against the Bolivian could cause the foreclosure of some of their businesses due to financial losses as a result of this anti-competitive monetary governmental policy; or if necessary, the dismissal of some workers.

On November 1, the exchange rate with the U.S. dollar suffered its seventh year drop; it was quoted at Bs 6.96 per dollar if you want to sell your dollars; and Bs 6.86 if you want to purchase dollars, according to official information released by the Central Bank of Bolivia.

The Vice President of the Chamber of Exporters (CAMEX) of La Paz, Larry Serrate, said the depreciation of the dollar is not only detrimental to exporters, but also affects the industrial sector in general, who lose with this issue and by the high production costs in the country as a result of inflation.

“Ultimately, if the dollar continues to drop at a time when export companies will need to suspend their operations, other Bolivian companies in the local market are also going to be affected because it will be easier to import than to produce in Bolivia” he said.

The president of the Federation of Private Entrepreneurs of La Paz, Luis Urquizo coincided with Serrate. “What worries us is basically employment” because the falling dollar affects “the industrial terribly,” said the businessman.

The manager of the Bolivian Foreign Trade Institute [IBCE], Gary Rodriguez, estimated that for every cent that falls in the exchange rate Bolivianos – Dollar, the non-traditional exports lose 15 million Bs.

So, do we continue “over appreciating” our national currency and cause unemployment in the value added production sector?, which is what Bolivia needs; do we just become an all-import country? knowing that most imports enter illegally, anyway, thus no taxes, lots of underemployment as well… there is a no brainer here.

Unfortunately, it seems that current government is paying little if any attention to these signals. In the meantime countries around us are becoming more and more efficient, competitive… Peru even exports avocado to Japan!! Such a fragile produce and they manage to export top quality and consistently. Here some of our producers like sugar and soy were denied to export…

In the past, I’ve met people who fled La Paz and established their industries in Chile (70s) and in the first part of the past decade, I’ve met people who were moving their plants from El Alto to Santa Cruz.

Question: what does this government think by lowering the dollar exchange rate? And then I remember all the illegal clusters in main Bolivian cities who one way or the other have given support to this government: Uyustus, Eloy Salmon, the Black Market [smuggled goods], Mayamicito [Bolivian pronunciation for Miami as most of electric apliances and state of the art technology comes from the US to Bolivia] in La Paz; La Ramada, Siete Calles, Barrio Lindo in Santa Cruz; La Cancha in Cochabamba, et al for the rest of Bolivia.

I have read many times how this “informal traders” made the police, Bolivian IRS, customs, municipality officials and other law-abiding officials to run for their lives. Those sites have “sovereignty of their own;” and with this government even more than with previous ones. They are the new untouchables, and fairly rich too.

I have met extremely rich “informal traders” throughout my life, and I have seen them when I walked on those open markets, they may have thousands of dollars, but they keep on eating poorly, by the sidewalks; their children do not attend good-solid-education schools; they keep their living standards and conditions the same as their great-great grandparents. And that is a main problem, as I see other societal clusters that work hard, do pay taxes and want the best food, the best education and the best health service their money can pay for their loved ones.

I would like to leave this post with something positive as I intend to do most of the times, but here I have nothing to offer. And what I wrote above is not meant to be interpreted as racist or demeaning. Afterall I think, it is just the same type of entrepreneurs that you would find in the USA or Europe some 150 years ago. Maybe it will change in the future, maybe.

Published by Bolivian Thoughts

Senior managerial experience on sustainable development projects.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: