Financial 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 situation. 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, residence 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 all the things 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 price soared to 24% in June.

“Costs for all the things are going up, however we’re nonetheless incomes the identical,” he says. “We’re nearly getting by, however it’s arduous 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 an alternative, I am right here on the road having an ice-cream with my son!”

Bolivia’s inflation spike has been brought on by a mixture of things. Falling pure fuel manufacturing and subsequently exports of this key overseas earner has led to a decline in abroad revenues.

In flip, this has meant a scarcity of US {dollars}, making it tougher and extra pricey for the nation to import petrol, diesel and meals stuffs, resulting in shortages and value 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 annoyed. 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 need to look forward 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 does not cowl our prices. However we will not put our fares up as a result of if we do, we cannot have any prospects. It will be too costly for them.”

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

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

With out this fuel to export, the Bolivian authorities is struggling to proceed to seek out the funds to subsidise petrol and diesel. Final 12 months it spent $2bn (£1.5bn) on such subsidies, in line with a latest assertion by a former minister of hydrocarbons and vitality.

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

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

However unofficially you may 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 overall supervisor for the Bolivian Institute of Overseas Commerce, explains: “A product that prices seven bolivianos right here in Bolivia could be offered for 15 bolivianos overseas,” he says.

“The issue is that companies would like to promote gadgets on the [overseas] black market fairly than right here in Bolivia which results in meals and gas 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 possibly can [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 underneath.

“I’m nervous with meals costs going up I can not afford to pay my employees a good wage,” says Ms Guglielmi. “I’m nervous in regards to the individuals not with the ability to afford to purchase my merchandise as a result of I need to put the costs up.

“And I’m nervous as a result of my margins have gone down so it’s totally arduous proper now for me to maintain a enterprise.”

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

Main is Samuel Doria Medina of Nationwide Unity Entrance. He was beforehand the principle 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 predicted to realize – then there shall be a second spherical of voting on 19 October.

Bolivian political scientist and analyst Franklin Pareja is sceptical that the following administration will be capable to 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 arduous influence of the financial disaster with a brand new authorities, as a result of it’ll make structural financial modifications, which shall 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 personal sector. The motive force of growth should 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 prone to be right-wing, such radical governmental and financial change, to considerably cut back the state’s position, will not be anticipated.