Fiscal pact urged due to falling gas revenue | Urge un pacto fiscal por caída de ingresos de la renta del gas

By El Diario:

Affected Departments

  • After the termination of the contract with Argentina, the economic situation of the departmental governments is becoming complicated, as around 95% of their budgets depend on royalties.
Analysts believe a fiscal pact is necessary to ensure the departments receive a share of revenues from economic activity—namely taxes—aimed at fostering regional economic development.

In light of the decline in revenue from natural gas sales to Brazil and the termination of the contract with Argentina, the economic situation of the departmental governments is deteriorating, as about 95% of their budgets rely on royalties. Therefore, a fiscal pact is being proposed to revise the revenue distribution model. Bolivia has lost over 4 billion dollars.

A document from the Jubileo Foundation notes that departmental governments receive income from royalties, the departmental compensation fund, the Special Tax on Hydrocarbons and Derivatives (IEHD), the Direct Tax on Hydrocarbons (IDH), the gaming participation tax, departmental taxes, own-source revenues, public sector transfers, donations, external and internal loans, central government transfers for health personnel and social services, and bank account balances from previous years.

Of the total 2025 budget for departmental governments, Santa Cruz has the largest allocation, with 24%; followed by Potosí with 20%, and Tarija with 17%; these three departments account for 61% of the total. La Paz receives 12%, Chuquisaca 8%, and Cochabamba around 8%, while the remaining three departments together receive the remaining 11%.

In this regard, economic analyst Darío Monasterio stated that the departments’ budget situation is worrisome and entering a terminal crisis, as 95% of their income depends on royalties.

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