Economic woes dominate as Bolivia prepares to go to the polls

As Bolivians put together to vote in a common election, the nation’s deep financial woes are the central subject. Whoever turns into the nation’s subsequent president faces a really troublesome job to attempt to kind out the mess.

El Alto is Bolivia’s second-largest metropolis, house to 1.2 million individuals. And, at an elevation of 4,150m (13,615ft), it’s the world’s highest metropolis with a inhabitants of greater than 100,000.

It is stuffed with slender streets with distributors making an attempt to promote you every part from oranges to knock-off designer trainers. Standing on a pavement, automotive mechanic Josue Macias is having fun with an ice cream along with his younger son.

He describes how Bolivia’s sky-high inflation is affecting him and his household. The annual fee soared to 24% in June.

“Costs for every part are going up, however we’re nonetheless incomes the identical,” he says. “We’re nearly getting by, however it’s onerous as a result of meals costs are rising on a regular basis, issues like meat, oil and eggs. They’re double or triple what they was.

“We have needed to tighten our belts. We do not exit to eat in eating places anymore. As a substitute, I am right here on the road having an ice-cream with my son!”

Bolivia’s inflation spike has been attributable to a mix of things. Falling pure fuel manufacturing and subsequently exports of this key international earner has led to a decline in abroad revenues.

In flip, this has meant a scarcity of US {dollars}, making it more durable and extra pricey for the nation to import petrol, diesel and meals stuffs, resulting in shortages and worth hikes. It has led to road protests throughout the nation.

At some petrol stations throughout the nation, lorry drivers typically have to attend greater than 24 hours to replenish.

Taxi driver Gonzalo Ris is pissed off. As we drive alongside the pot-holed streets of La Paz, the nation’s administrative capital, he tells me about his struggles.

“Earlier than it was simple to replenish with petrol. Now I have to look ahead to round 4 to 6 hours on the fuel pump to get some, and that is an excessive amount of. It is such a waste of time.

“And the costs are so costly,” he provides. “Now the cash we earn would not cowl our prices. However we will not put our fares up as a result of if we do, we can’t have any clients. It could be too costly for them.”

For nearly 20 years the Bolivian authorities saved gasoline costs artificially low by means of subsidies. This began when the federal government of then President Evo Morales nationalised the nation’s hydrocarbon sector in 2006.

However in 2023, state power firm YPFB mentioned Bolivia was working out of domestically-produced pure fuel, because of an absence of funding in new exploration.

With out this fuel to export, the Bolivian authorities is struggling to proceed to search out the funds to subsidise petrol and diesel. Final yr it spent $2bn (£1.5bn) on such subsidies, in keeping with a current assertion by a former minister of hydrocarbons and power.

Outgoing left-wing President Luis Arce, who shouldn’t be looking for re-election on 17 August, blamed the Bolivian parliament for the autumn in pure fuel manufacturing, accusing MPs of blocking important oversea loans. His opponents in flip blame him for the financial turmoil.

The official change fee of Bolivia’s foreign money, the bolivianos, is definitely not serving to issues. Since 2011 the federal government has fastened the change fee at 6.96 bolivianos to at least one US greenback.

However unofficially you will get 14 to fifteen bolivianos per greenback. This has led to a thriving black market, particularly of exports, from which the federal government misses out on tax income.

Economist Gary Rodriguez, the final supervisor for the Bolivian Institute of Overseas Commerce, explains: “A product that prices seven bolivianos right here in Bolivia could be bought for 15 bolivianos overseas,” he says.

“The issue is that companies would like to promote objects on the [overseas] black market quite than right here in Bolivia which ends up in meals and gasoline shortages.”

Restrictions on the usage of bank cards is one other headache for Bolivia’s enterprise group.

“The issue with the bank cards is that each one the banks have limits which might be ridiculous,” says Alessandra Guglielmi, who owns a meals enterprise known as The Clear Spot.

“You’ll be able to [only] spend round $35 a month over the web with on-line purchases. $35 is nothing for a enterprise.”

She is worried about her enterprise going beneath.

“I’m apprehensive with meals costs going up I can not afford to pay my employees an honest wage,” says Ms Guglielmi. “I’m apprehensive concerning the individuals not with the ability to afford to purchase my merchandise as a result of I have to put the costs up.

“And I’m apprehensive as a result of my margins have gone down so it is very onerous proper now for me to maintain a enterprise.”

Many individuals in Bolivia are hoping {that a} new authorities will be capable of flip the nation’s fortunes round. Two right-wing candidates are presently forward within the polls for the presidential race.

Main is Samuel Doria Medina of Nationwide Unity Entrance. He was beforehand the primary shareholder of Bolivia’s largest cement producer.

In second place is Jorge Quiroga of Freedom and Democracy. He has been president of Bolivia earlier than, from 2001 to 2002.

If no candidate will get greater than half the votes on 17 August – which no-one is anticipated to realize – then there might be a second spherical of voting on 19 October.

Bolivian political scientist and analyst Franklin Pareja is sceptical that the subsequent administration will be capable of enhance most individuals’s lives.

“The inhabitants is assigning a change in authorities nearly magical qualities, as a result of they suppose that with a change of presidency we’ll return to stability and prosperity,” he says. “And that is not going to occur.

“Bolivia will solely really feel the onerous impression of the financial disaster with a brand new authorities, as a result of it’ll make structural financial adjustments, which might be unpopular.”

Mr Rodríguez is adamant that the Bolivian financial system must be considerably altered. “We have to change the mannequin, as a result of the present mannequin, has an excessive amount of emphasis on the state,” he says.

“There are two actors, one the state sector and the opposite the non-public sector. The motive force of growth have to be the citizen, the entrepreneur, and for that, the state should do what it is meant to do. In different phrases, good legal guidelines, good laws, good establishments.”

Whereas polls recommend Bolivia’s subsequent administration is more likely to be right-wing, such radical governmental and financial change, to considerably scale back the state’s function, shouldn’t be anticipated.