By ANF, Eju.tv:

Analysts Agree That If the IMF Agreement Is Not Approved or Fails, Bolivia Will Collapse

Economists Jaime Coronado and Gonzalo Colque agreed that the country will collapse if the agreement with the International Monetary Fund (IMF) is not approved or if the adjustment plan pending approval in the Plurinational Legislative Assembly fails.

Jaime Coronado in the studio, host Andrés Gómez, and Gonzalo Colque via Zoom. Photo: ANF

Coronado, former Vice Minister of Budget and Fiscal Accounting and a member of the team that negotiated the IMF agreement, argued that Bolivia will “collapse” if the deal with the international organization fails. “We will not be better off in any way. This is an opportunity that must be seized,” he said.

Colque believes the agreement will not be approved by the Legislative Assembly and also questioned the fact that Rodrigo Paz’s government does not have a “Plan B” if legislative approval fails. “There will be no reform, there will be no adjustment, and we will collapse because of the fiscal deficit. The cost remains high under that scenario,” he stated.

Both exchanged views on the program Talking About Bolivia Over a Cup of Coffee on Radio Fides, discussing whether the IMF is Bolivia’s only path out of the economic crisis or whether there are other alternatives, and what those alternatives might be.

“Every day that adjustment measures are postponed, we are being pushed closer to the International Monetary Fund for a rescue,” said researcher and economist Gonzalo Colque. In his view, there was no “counterbalancing negotiation” with the Bolivian government, but rather a series of conditions imposed.

The Paz government and the IMF negotiated a $1.9 billion loan. The memorandum of agreement has already been approved by the IMF; however, for it to take effect, the Legislative Assembly must approve the bill.

Colque stressed that the country has “a rope around its neck, and every time we delay measures, there is very little room left for negotiation,” because too many conditions could make implementation of the agreement unworkable.

For his part, the former vice minister argued that the program is a response to a critical reality marked by a high fiscal deficit, heavy debt, and virtually nonexistent reserves. In that context, he asked, who would be willing to lend to Bolivia?

Regarding fuel subsidies, he stated that it is “impossible” to maintain them and that they should be removed because they pose a threat that could “derail the program and the stabilization process.”

“The gap between international fuel prices and the prices we currently have is draining public finances, and ultimately the population is paying for it,” Coronado added, arguing that the sooner subsidies are phased out, the healthier it will be for the country.

Meanwhile, Colque stated that this is the worst possible year to eliminate fuel subsidies because there is not even a compensation fund in place. “It is unbearable for the population,” he commented.

/nvg/