Bolivian Treasury 101: 45,500 million dollars after and … WTH?!

Armando Alvarez writes in Pagina Siete:

45,500 million dollars

During 13 years of government, the current authorities have disposed of 45,500 million dollars. 37,500 million from income from gas exports, mainly thanks to the Hydrocarbons Law that was promulgated in May 2005 and not to the nationalization of the sector, as the government authorities maintain, and 8,000 million due to the external debt assumed end of 2018.

At the end of 2005, the country’s external debt amounted to US $4,942 million dollars, but in the following two years it decreased, as a result of debt forgiveness programs for highly indebted poor countries (known as HIPC, for its acronym in English), which were managed by previous governments, but benefited the current one. The balance of the external debt at the end of 2007 was reduced to 2,208 million, similar to the debt level of 1980.

Since then the external debt grew steadily, reaching the end of 2018, $10,178 million dollars. Between 2006 and 2013, although the fiscal accounts registered surpluses, the external debt increased by $3,400 million dollars, and between 2014 and 2018, given the need to finance a growing fiscal deficit, it increased by an additional $4,600 million dollars.

With this important amount of resources, which no other government had in the 193 years of existence of the country, it would have been desirable that, in addition to the social advances achieved (although important issues such as health continue to be inadequately addressed) and fundamentally so that these be sustainable over time, diversify the productive sector and the supply of exportable goods, in order to reduce the dependence on raw materials and generate durable sources of employment.

And, at the same time, service sectors that can generate foreign currency for the country would be seriously developed; public infrastructure would be developed to support productive sectors; establish stabilization funds to have resources in bad times or, by persist betting on raw materials -which historically has proved not to be a good decision- measures would be implemented to find and find new reserves of hydrocarbons, and minerals, in order to continually replenish those that are being exploited, and thus have continuous income from their exportation.

Unfortunately, very little or almost none of it has happened. A part of the resources have been destined to the constitution of public companies, many of them without economic sense and, therefore, not viable. Another part is the development of infrastructure that does not generate any support to the productive sectors and is not used. No serious policies have been implemented or resources have been allocated for the development of service sectors, such as tourism, which give good returns to neighboring countries, and resources have not been reserved for lean times, such as those we have lived since 2014 .

The worst is that no significant new reserves of hydrocarbons and minerals have been discovered, accounting for 80% of the country’s exports. Most of the reserves of both natural resources that have been and are being exploited and commercialized were discovered before the arrival of the current government and, as expected, are declining, and in some cases exhausting.

After having disposed of $45,500 million dollars in 13 years, the Bolivian economy has not diversified and continues to be highly dependent on raw materials that are being depleted, and whose export earnings are decreasing, and to sustain growth with a tendency to the decrease since 2014, the Government resorts to a growing public debt, and to use international reserves.

It would be good for the government authorities to explain how, with the same economic policy, they intend to achieve in the coming years what they did not achieve with $45,500 million dollars, before a future perspective that they themselves contributed to make it unfavorable.

https://www.paginasiete.bo/opinion/2019/7/3/45500-millones-de-dolares-222871.html

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