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Bolivia recovers from deep economic crisis

Bolivia, Jeanine Áñez, COVID-19, Pandemic, GDP, Productive Social Community Economic Model

Economy

Bolivia recovers from deep economic crisis

With the various economic and social measures implemented since December 2020, Bolivia has recovered from a deep crisis and resumed the path of economic growth with 9.4 per cent in the second quarter of 2021, said Bolivian President Luis Arce.

According to the head of state, the decisions of the de facto government of Jeanine Áñez and the COVID-19 pandemic had a profound impact on the economic and social spheres.

“The shift in economic policy towards the return of neoliberalism caused a break in the trajectory of sustained growth of the country, which, accompanied by deficient policies and alien to the national reality, caused an economic crisis,” he said on Monday during his report on his first year in office.

According to the president, the rigid quarantine by COVID-19 covered, in economic matters, the incapacity with which this sector of the country was being managed since November 2019.

“The break in the constitutional order of course brought, hand in hand with the neoliberal policy, a structural break in the economy, and the 2020 administration closed with a contraction of the Gross Domestic Product (GDP) of -8.8 per cent, the strongest in 67 years,” he lamented.

He explained that, thanks to the return to democracy in November last year, various measures were taken to rebuild the economy, based on an adequate management of the pandemic, which would allow a return to growth.

“The measures implemented responded favourably, achieving positive results for our economy, reducing the depth of the crisis, which in the second and third quarter of 2020 hit rock bottom, with pronounced accumulated falls in output of -12.9% and -12.6%, respectively,” he emphasised.

He indicated that since the government took office in the fourth quarter of 2020, Bolivia has gradually returned “to a positive horizon”, reflecting the results of the measures implemented, so that in the second quarter of 2021, Bolivia recorded a cumulative GDP growth of 9.4%.

“Among the measures adopted, as soon as we assumed the national government, the Productive Social Community Economic Model (MESCP) was immediately re-established through the orientation of an economic policy that promotes the dynamism of domestic demand,” he said.

He stressed that with the reinstatement of the MESCP, which establishes public investment as a pillar of the dynamism of domestic demand, the reversal of the paralysis of works in the country was determined as a central element.

“Encouraging records were achieved in terms of public investment, which, in the period from November 2020 to September 2021, amounts to an amount of 2,342 million dollars, an increase of 70% in relation to the execution recorded in the same period during the de facto government; clear evidence of the turnaround in the country’s economic policy,” he said.

Measures aimed at economic reactivation

One of the first measures implemented by the Arce government was the Bs 1,000 Bono Contra el Hambre, to support people who were affected by the economic paralysis caused by the COVID-19 pandemic.

According to official reports, between December 2020 and May 2021, a total of 4,035,773 Bolivians between the ages of 18 and 59 who do not receive a public or private salary, benefited from the cancellation of this bonus, with an amount of Bs 4,036 million.

As of 20 October this year, the SIBOLIVIA credit benefited 3,793 productive units with Bs 436.4 million disbursed, with a fixed annual interest rate of 0.5%, for import substitution.

This measure was activated with a trust fund of more than Bs 911 million, through Supreme Decree 4424 of 17 December 2020, to reactivate the country’s productive and economic apparatus.

Law 1357 on the Tax on Great Fortunes (IGF) was enacted, through which Bs 240,208,432 was collected from 204 taxpayers in La Paz, Santa Cruz, Cochabamba, Beni, Potosí, Chuquisaca, Oruro and Tarija, whose wealth exceeds Bs 30 million.

According to the National Tax Service (SIN), this income, collected from taxpayers with large fortunes, contributed greatly to reactivating the national economy.

As of October, Bs 20,667,818 was returned to 58,974 beneficiaries of the Value Added Tax Cash Refund System (Re-IVA), which is available to individuals with an average monthly income of Bs 9,000 or less, with a 5% VAT refund.

The national government made a commitment to the Bolivian population to exceptionally establish the refund of contributions to the Pension Fund Administrators (AFP), to cover their needs arising from the COVID-19 pandemic.

In this way, the AFPs returned an amount of Bs 456 million to 85,458 policyholders up to 3 November this year, within the framework of Law 1392 of 8 September 2021, which created this measure.

Likewise, the Fideicomiso de Apoyo a la Reactivación de la Inversión Pública (Farip) of Bs 2,000 million was set up for autonomous territorial entities, including the governors’ offices, which suffered a drop in income “as a result of the de facto government’s mismanagement of economic policy”.

Reduced unemployment in the country

Economic analyst Mike Gemio stressed that Bolivia now has positive economic indicators, compared to last year, such as, for example, the unemployment rate, which has fallen thanks to the policies of the current government.

President Arce, indicated that according to data from the National Institute of Statistics (INE), the urban unemployment rate increased from 4.3% in October 2019 to 11.6% as of July 2020, which implies that 253,000 Bolivians lost their source of labour during that period.

“(But) with the recovery of democracy in November 2020, measures were adopted that allowed the Bolivian population to access employment; therefore, the urban unemployment rate was lowered to the order of 6.2% as of September 2021,” he highlighted.

According to the authority, with the immediate reinstatement of the Social Community Productive Economic Model and the application of different measures, work is being done to eradicate extreme poverty “in all its dimensions”.

This effort was cut short in 2020, as there was a setback in the results obtained in past administrations, increasing the level of extreme poverty to 13.7 per cent and moderate poverty to 39 per cent.

“With the recovery of democracy, it is expected that the well-being of Bolivians will improve with the increase in labour and non-labour income, with which moderate and extreme poverty will be reduced with respect to the 2020 figure,” he said.

Public enterprises reactivated and strengthened

According to the Head of State, after being paralysed by the de facto government, the different public companies were gradually reactivated and are now strengthening Bolivia’s production and exports.

“These industrial facilities, in addition to strengthening the articulation of agricultural production in the regions, will strengthen the export supply with the opening of new products,” he said.

He indicated that, for example, the Empresa Azucarera San Buenaventura (Easba) – whose damages caused by the de facto administration were repaired with Bs 35.1 million – now has signed sales contracts for Bs 40.2 million, thanks to the resumption of its operations.

He added that productive projects run by Empresa Boliviana de Alimentos y Derivados (EBA) were also reactivated, such as the freeze-drying plants for fruit, inaugurated in Cochabamba and La Paz with an investment of Bs 101.6 million this year.

He stressed that, with the reactivation of the production complexes, up to September 2021, 9.2 million litres of milk, 2.2 million litres of fruit nectar, 460.2 tonnes (t) of honey, 950.1 t of derivative products and 26.2 containers of processed almonds were processed, generating Bs 226.3 million in sales revenue and benefiting 3,095 producers.

On the other hand, thanks to the reactivation of the Empresa de Apoyo a la Producción de Alimentos (Emapa), up to October of this year, 247,963 tons of grains (corn, wheat and rice) were collected, which means a 45% growth compared to 2020.

The operations of the companies Yacana, Quipus, Cartonbol (Cartones de Bolivia), Papelbol (Papeles de Bolivia), Envibol (Envases de Vidrio de Bolivia), Eepaf (Empresa Estratégica de Producción de Abonos y Fertilizantes), Ecebol (Cementos de Bolivia), BoA (Boliviana de Aviación) were reactivated.

In addition to important corporations such as ENDE (Empresa Nacional de Electricidad), YPFB (Yacimientos Petrolíferos Fiscales Bolivianos), YLB (Yacimientos de Litio Bolivianos), among others.

The Ammonia and Urea Plant (PAU), built in Bulo Bulo, Cochabamba, which suffered economic damage of more than $428 million due to mismanagement by the de facto government, has been added to the list of restarted companies.

The petrochemical complex, once up and running, reached a production of 49,026 tonnes and is expected to exceed 201,442 tonnes by December 2021 to supply the domestic market and exports.

Social vouchers benefit the population

After assuming the mandate of the Bolivian people, the government continued to implement social policy measures, such as the Juancito Pinto bonus, the Renta Dignidad and the Juana Azurduy bonus, in addition to the aforementioned Bono Contra el Hambre.

According to data from the Pension and Insurance Supervisory and Control Authority (APS), as of 30 September 2021, more than one million older adults had received the Renta Dignidad.

Last month, the Minister of Education, Adrián Quelca, reported that the Bono Juancito Pinto will benefit 2,370,037 students from all over the country in public and private educational units, with an investment of Bs 486,163,000.

The resources for the payment of this bonus and others come from the profits of public companies, such as YPFB, Emapa, the National Telecommunications Company (Entel), Ende, the Bolivian Space Agency (ABE), among others.

Energy sector boosted by Bs 5,634 million

In the de facto government’s administration, investment in hydrocarbons and energy reached Bs 1.696 billion; by 2021, however, it had tripled to Bs 5.634 billion, with the aim of boosting and strengthening the country’s energy potential, according to President Arce.

“Natural gas production in 2020 was 43.5 million cubic metres per day (MMmcd), while in 2021 it rose to 45.4 MMmcd, an increase of 4.4 per cent. On the other hand, liquid hydrocarbon production went from 41.6 thousand barrels per day to 42.9 thousand barrels per day, which represents a growth of 3.1 percent,” he said.

In terms of oil revenue, he said it rose from $us 1,652 million to $us 1,918 million, an increase of 13.9 percent, a vital contribution that goes to the three levels of government in the form of royalties and IDH (Direct Tax on Hydrocarbons), to public universities and to the payment of the Dignity Income.

He also said that the commercialisation of natural gas in the domestic market reached 11.4 MMmcd, 15.7% more than in the previous administration.

“In this year of government we plan to exceed 89,000 internal connections of domestic gas, in the 2020 management were only 52,292, exceeding 71 percent of what was done in 2020, benefiting nearly 90 thousand families,” he said.

Regarding the conversion of vehicles to natural gas for vehicles (NGV), he reported that in the de facto government was made 2.501 conversions, but so far in the management 2021 were made 10.170 conversions, 594 per cent more than the previous management.

On the electricity sector, he mentioned that in 2020 the installed power was 45 megawatts (MW), while in 2021 it increased by 617 MW and is scheduled to increase to 671 MW, thus ensuring the country’s energy stability.

“In our first year, we have managed to increase the effective power to the National Interconnected System (SIN) by 2,140.7 percent, reaching a power of 578 megawatts,” he emphasised.

Lithium industrialisation progresses

According to the head of state, this year Bs 45.1 million will be generated by the industrialisation and sale of lithium-derived products, such as potassium chloride, lithium carbonate and batteries.

This will be possible thanks to the reactivation of the operations of the pilot and industrial-scale plants installed in the salt flats of the municipality of Uyuni in the department of Potosí, according to official figures.

For his part, the vice-minister of High Energy Technologies, Álvaro Arnez, remarked that the state-owned YLB expects to close the year with record sales of products such as potassium chloride and lithium carbonate.

According to the authority, the world requires lithium, especially for the growth of the electric vehicle industry, so “Bolivia can no longer support a further delay in the issue of soft metal, the next year if or if you have to start with industrial plants”.

Mutún, the main mining achievement

President Arce said that, on completing his first year in office, the main achievement in mining matters is the reactivation of the “Mutún Steel Plant” project in Santa Cruz, after a stoppage of activities following the coup d’état.

He pointed out that during his administration, the Lucianita sugar mill of Empresa Minera Huanuni (EMH) began production operations, with a production capacity of 3,000 tonnes of tin per day.

In addition to the construction of the Minerals Concentrator Plant (tin and zinc) of Empresa Minera Colquiri (EMC), in La Paz, with a processing capacity of 2,000 tonnes per day.

Another commitment fulfilled, said the president, is the beginning of the negotiations to promote the Zinc Refining Plant project in Oruro, within the framework of the industrialisation policy with import substitution.

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