Five factors aggravating the economic crisis | Cinco factores que agravan la crisis económica

Juan Carlos Salinas, El Deber:

Entrepreneurs see five factors aggravating the economic crisis in Bolivia

La falta de dólares preocupa a los empresarios del país /Foto: Ricardo Montero
La falta de dólares preocupa a los empresarios del país /Foto: Ricardo Montero
  • The lack of dollars,
  • the shortage of fuel,
  • the increase in bank commissions,
  • roadblocks, and
  • drought are the issues affecting the country’s productive sector. The Government assured that it is addressing business problems.

Five factors that are accumulating one after another are a cause for concern for entrepreneurs who believe that if they are not addressed, the country’s economic problems will worsen.

In addition to the shortage of dollars, which dates back to the first quarter of 2023, irregular fuel supply and the rising bank commissions, which have increased from 6% to 22%, must be added. This situation led Jaime Ascarrunz, president of the National Chamber of Commerce (CNC-Bolivia), to request an emergency meeting with government authorities.

Ascarrunz emphasized that the private sector wants to meet with the Government to inform them of the difficulties they are facing due to the shortage of foreign currency, the difficulties in purchasing hydrocarbons, and “the significant losses that our sector suffers due to roadblocks. But also to put forward a set of proposals that the private sector has been working on to address these problems,” said the entrepreneur.

On the subject, the National Chamber of Industries (CNI) noted that until 2023 there was an 89% decrease in Net International Reserves (NIR) and that in this situation, they proposed coordinating public-private work based on four pillars: Liberalize exports to generate more internal production and export manufactured products that generate foreign exchange. Speed up, simplify, and modernize the Sanitary Registry operations of the National Service of Agricultural Health and Food Safety (Senasag), to generate more production, exportation, and generation of foreign exchange. Speed up the Single Foreign Trade Window (VUCE) to unify procedures in the public sector for the export and import of raw materials, imported inputs, and industrial capital goods. And, in the long term, modernize the Tax System, the Labor Code, and the Investment Law, in order to allow greater participation of private capital and public-private investments.

To the three factors mentioned above, the roadblocks must be added, which in the last protest, according to the Government, for 16 days of road closures, there were economic losses amounting to $1.000 billion and finally another problem that worries is the negative effect of drought on agricultural production.

From the National Agricultural Confederation (Confeagro), they expressed their concern about the uncertainty caused by the lack of dollars and the increase in commissions, which exceed 22%, to transfer this currency abroad for the purchase of inputs.

“The national agricultural sector uses machinery, equipment, inputs, and tools imported in their entirety except for urea, therefore, if this trend continues, the situation in the coming months could become unsustainable. In this context, in the face of the increase in our costs, the negative effect would directly affect thousands of producer families dedicated to this activity in the national territory,” warned the entity.

While emphasizing that the sector is in a complicated situation, but despite the disruption of the cost chain, food security is being guaranteed, but drought, intermittent fuel supply, and the shortage of dollars are blows that are undermining the stability of the producers, Confeagro pointed out.

“To our authorities, we say that our commitment is and will be to produce more and better, and we are ready to work on whatever is necessary, but we demand reciprocity because it is in their hands to resolve the lack of dollars, regulate commissions for transfers abroad for imports, and speed up procedures,” emphasized the national agro-agency.

Other sectors

Javier Arze, manager of the Chamber of Construction of Santa Cruz (Cadecocruz), explained that in a construction, between 1,000 and 8,000 items are required, of which cement and iron are the most important.

“With cement, we have no problems since it is domestic production, but with iron, the issue is critical. Its price varies from day to day, and its cost has already increased by 25%. Aluminum, porcelain, cables are also imported, so it can be assured that a work in this situation increased between 25% and 30%,” said Arze.

Who pointed out that if the increase occurs in the private sector, it is transferred to the final consumer, but when it comes to a public work, the scenario is very different since Law 181 prohibits a price adjustment.

“That means that if a work was tendered two years ago, the builder despite the increases, will only charge the agreed cost. That means that it will be at a loss, that is why we are asking that that norm becomes ineffective and allows an update of prices as if it allows works that are financed by the CAF or the IDB,” Arze emphasized.

The Federation of Private Entrepreneurs of Santa Cruz expressed concern about the shortage of dollars, a situation that is causing difficulties for entrepreneurs who carry out their international commercial transactions.

“The conjuncture shows us a sustained increase in bank commissions and a decrease in transfer limits, resulting from the shortage of foreign currency in the national financial market, causing difficulties for entrepreneurs who carry out their commercial transactions abroad to acquire raw materials, payment of services and activate the production chain in different sectors and, on the other hand, generates problems for importing companies.”

Another aspect that the business institution observed is the recurring complications due to roadblocks, confrontations in the Legislative Branch, and lack of fuels, aggravating the situation facing the country.

Government concern

In the face of the pharmaceutical industry’s concern about the lack of dollars, the Minister of Economy and Public Finance, Marcelo Montenegro, reported that they will work with the state-owned Banco Unión to access the foreign currency that the sector needs for the importation of inputs that allow them to manufacture medicines and other health sector products.

“It is important to lay the foundations for meeting, looking at what are the obstacles that prevent the Bolivian Pharmaceutical Industry Chamber (Cifabol) from accessing foreign exchange. In this sense, we have proposed an important solution in terms of that Banco Unión will be able to make an interface with Cifabol to see the foreign exchange requirements and the costs based on the requirements made by the associates,” explained the authority.

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