After a decade of cheap populism… reality is a Bolivian Declining Economy

A crude reality for Bolivia, an Editorial from El Diario:

Declining economy

El Diario logoEconomic data has been published by El Diario newspaper in recent days, show that there is an alarming decline in this vital sector of national life. On good terms, one could say that if it were not for the natural gas exported by the country, we would be back to the 80s-90s of last century.

In contrast, it does not appear that fiscal spending is not following a series of austerity measures, in order to seek a balanced approach to be adopted with that reality. There is continued waste of dwindling national income.

The easy remedy, but inconvenient for the economic future of the country is appealing to credit. On the one hand, the international financial institutions to act more like loan sharks as cohelpers of a better management of national income. They offer loans without rationality to be advised that the case merits and obviously governments receive these resources as if they were not going to be a burden for future generations.

Furthermore, with ease and greater irrationality, it appeals to foreign loans, as if they were generous rain from heaven. It has sought a false explanation to justify the eagerness of indebtedness, saying that economic capacity is favorable, that we have wide margins to continue to get loans, as if they were nothing short but spell bubbles of fictitious numbers and not the concrete realities.

In the case of mining, for centuries, remains the main source of Bolivia’s income, in 2015 the prices of zinc, lead, tin and even gold, have fallen by 28%, with silver being the case more pronounced downfall (47%).

The situation is more illuminating when it is established that from the last five years, overall average, mining revenues fell by 50%. In particular, the silver fell by 70% and 57% tin.

Experts also point out that, according to the 2014 National Tax Report and the 2015 ranking, the four private mining companies (San Cristobal, Manquiri, Sinchi Huayra and Pan American Silver), operating with foreign investment, have lost this year positions among the 250 largest companies in the world and the top 100 in taxes.

The damage over these declines affect the income of the governorates and municipalities in Potosi, Oruro and to a lesser extent La Paz.

Finally, it is necessary to take into account the reports of international organizations and experts on the outlook for commodity prices. They say it is not just a passing storm, but in any case, will be extended to a more or less longer period and producing countries must face the reality that they are facing a harsh recession.

An expert from Harvard provided more specific data. If the slowdown in China continues (consider that there are many indications in that direction), it is likely that the commodity crisis deepens, because no other economy in the world has the capacity to revive international demand.

Published by Bolivian Thoughts

Senior managerial experience on sustainable development projects.

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