Bolivia: Subventions 101, irresponsible and unsustainable demagogue

An important Editorial analysis from El Diario:

Subvention, a great dilemma

El DiarioThe Government, since the damn “gasolinazo” [Bolivian slang of a proposed high increase in the prices of gasoline, diesel and liquid gas] of December 2010, has left in abeyance concerns by that measure, since the determination to abolish subsidies was overturned, it opened new avenues to continue with policies that, for many decades, leave a drained country. And it is that those subsidized fuels, with financial support from the General Treasury of the Nation (TGN), as a “means of aid to the people”, are counterproductive, because any subvention is contrary to all economic and financial principle.

Countries like Venezuela and many from the Middle East, large producers of hydrocarbons together with the United States, are given the luxury of subsidizing the price of fuels, because their economies permitted it. But they do so at the expense of not living the reality and be able to allocate the amount of these grants to works of general importance for their populations.

We in Bolivia, poor and underdeveloped, have the “Godfather” of the TGN that pays the real value to have [‘cheap’] fuel, with the false idea that it “helps the people”. The truth is that with such gifts, we even benefit members of the diplomatic corps and those who benefit the most are those carrying fuel to our international borders through smuggling. In simple words, we become poorer by just paying for others, instead of benefitting us Bolivians.

It is undeniable that to suspend subsidies to the gas, gasoline, kerosene and others, it would mean opening the doors of greater poverty by more expensive goods we use and consume; the measure would not imply any immediate benefit because the cost of the “family basket” would raise much more than it should by the action of speculators and dishonest traders, those who rise the price of what they sell in much larger amounts, in order to enrich easily. However, what to do in front of a situation that becomes unsustainable for the country?

If there were studies done with honesty and responsibility, the first thing would be to attack the smuggling of hydrocarbons that benefits other countries; second, to avoid speculation in some parts of the country; third, promote more investment for a more rational exploitation of oil and gas; not extend more household connection networks while we do not have the necessary quantities of gas.

Finally, avoid new contracts for the sale of gas, until we have not duplicated our oil and gas production and do not have, in addition, the plants necessary to increase our hydrocarbon production; but, will the Government be encouraged to take such steps?

The case of subsidies is a challenge to the Government and if it puts into practice honest and responsible policies, may find remedies; But if it continues with contemplative and populist policies, will exacerbate the problem and will have, in a short time, very large gasoline, gas and other crises.

If the 2010 measures in the subsidies were to be fulfilled, in two years we would have advanced much, as long as urgent collateral measures had been taken. What pertains now is addressing the problem with truth, honesty and responsibility.

crystal clear right?!

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