Bolivia emerges from severe crisis and returns to growth of 9.4%

RIO DE JANEIRO, BRAZIL – According to the Bolivian Head of State, the decisions of the Jeanine Áñez interim government and the Covid-19 pandemic caused significant economic and social impacts.

“The shift in economic policy towards the return of neoliberalism caused a break in the trajectory of sustained growth in the country, which, coupled with poor policies and alien to the national reality, led to an economic crisis,” the president said Monday during his first-year term report.

According to the president, the strict quarantine imposed by Covid-19 overshadowed the economic inability under which the country’s economy was being managed since November 2019.

“The break in the constitutional order obviously led to a structural economic breakdown, coupled with neoliberal policies, and the 2020 administration closing 2020 with a GDP decline of -8.8%, the most severe in 67 years,” he lamented.

He explained that thanks to the recovery of democracy in November last year, several measures were implemented to rebuild the economy, based on an adequate management of the pandemic, allowing a return to a path of growth.

“The implemented measures had a favorable impact, achieving positive results for our economy, reducing the depth of the crisis, which in the second and third quarters of 2020 hit bottom, with pronounced accumulated drops of -12.9% and -12.6%, respectively,” he emphasized.

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

“Among the measures adopted, immediately after we took office, the Productive Social Community Economic Model (MESCP) was reestablished by guiding an economic policy that promotes the dynamism of domestic demand,” he said.

He emphasized that with the reinstatement of the MESCP, which establishes public investment as a pillar of the dynamism of domestic demand, reversing the stagnation of works in the country was defined as a key element.

“Encouraging records were achieved in terms of public investment, which, in the period from November 2020 through September 2021, amounts to US$2.342 billion, 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 pointed out.

MEASURES FOCUSED ON ECONOMIC REACTIVATION

One of the first measures implemented by the Arce Government was the Bs 1,000 (US$145) “Bono Contra el Hambre” (Bonus Against Hunger), to support the people affected by the economic shutdown caused by the Covid-19 pandemic.

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

As of October 20 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 enabled with a trust of over Bs 911 million, through Executive Order 4424 of December 17, 2020, to reactivate the country’s productive and economic structure.

Law 1357 of the Tax on Great Fortunes (IGF) was enacted, through which Bs 240,208,432 were 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 Treasury (SIN), this revenue, collected from taxpayers with large fortunes, has greatly contributed to the reactivation of the national economy.

As of October, Bs 20,667,818 were refunded to 58,974 beneficiaries of the Value Added Tax Cash Refund Regime (Re-IVA), provided to individuals with an average monthly income equal to or less than Bs 9,000 with a 5% VAT refund.

The National Government committed to the Bolivian population to exceptionally establish the refund of contributions to the Pension Fund Administrators (AFP), in order to cover their needs arising from the Covid-19 pandemic.

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

Likewise, the Trust Fund to Support the Reactivation of Public Investment (FARIP) amounting to Bs 2,000 million was created for autonomous territorial entities, among them the governors’ offices, which were affected by a drop in revenues “as a result of the mismanagement of the economic policy by the de facto Government.”

UNEMPLOYMENT DROPS

Economic analyst Mike Gemio pointed out that Bolivia now shows positive economic indicators compared to last year, such as the unemployment rate, which has dropped thanks to the current government’s policies.

President Arce said that according to National Institute of Statistics (INE) data, the urban unemployment rate increased from 4.3% in October 2019 to 11.6% in July 2020, representing 253,000 Bolivians who lost their jobs 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 decreased to around 6.2% as of September 2021,” he highlighted.

According to the president, with the immediate reinstatement of the Social Community Productive Economic Model and the implementation of several measures, efforts are being made to eradicate extreme poverty “in all its dimensions.”

This effort was interrupted in 2020, given that there was a setback in the results achieved under past administrations, increasing the level of extreme poverty to 13.7% and moderate poverty to 39%.

“With the recovery of democracy, the welfare of Bolivians is expected to improve with the increase in labor and non-labor income, with which moderate and extreme poverty would be reduced with respect to the 2020 figure,” he said.

PUBLIC COMPANIES REACTIVATED AND STRENGTHENED

According to data from the Head of State, after being paralyzed by the de facto government, several public companies were gradually reactivated and now strengthen Bolivia’s production and exports. “These industrial facilities, in addition to strengthening the articulation of agricultural production in the regions, will strengthen exports with the opening of new products,” he said.

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

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

He stressed that with the reactivation of production plants, 9.2 million liters of milk, 2.2 million liters of fruit nectar, 460.2 tons of honey, 950.1 tons of derivative products and 26.2 containers of processed almonds were processed up to September 2021, generating Bs 226.3 million in revenues and benefiting 3,095 producers.

On the other hand, as a result of the reactivation of the Empresa de Apoyo a la Producción de Alimentos (Emapa), 247,963 tons of grains (corn, wheat and rice) were collected up to October this year, representing a 45% increase 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 major 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 incurred losses of over US$428 million due to the mismanagement of the de facto government, was been added to the list of reactivated companies.

Once in operation, the petrochemical complex reached a production of 49,026 tons and is expected to exceed 201,442 tons by December 2021 to supply the domestic market and exports.

SOCIAL AID BENEFIT THE POPULATION

After assuming the mandate of the Bolivian people, the government continued the social policy measures implemented, 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 September 30, 2021, over 1 million senior citizens had received the Renta Dignidad.

Last month, Minister of Education Adrián Quelca informed that the Juancito Pinto Bonus will benefit 2,370,037 students nationwide from fiscal and agreement educational units, with an investment of Bs 486,163,000.

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

ENERGEY SECTOR BOOSTED

In the de facto government’s administration, the investment executed in hydrocarbons and energy reached Bs 1,696 million; on the other hand, by 2021, it tripled to Bs 5,634 million, in order to strengthen the country’s energy potential, according to president Arce.

“Natural gas production in 2020 stood at 43.5 million cubic meters per day (MMmcd), while in 2021 it rose to 45.4 MMmcd, i.e. it increased by 4.4%. On the other hand, the production of liquid hydrocarbons increased from 41,600 barrels per day to 42,900, representing a growth of 3.1%,” he highlighted.

In terms of oil revenues, he stated that they increased from US$1.652 billion to US$1.918 billion, up 13.9%, a vital contribution directed to the three levels of government in the form of royalties and IDH (Direct Hydrocarbon Tax), to public universities and to the payment of the Renta Dignidad.

Likewise, he said that the sale 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 programmed to exceed 89,000 internal domestic gas connections, in the 2020 administration they were only 52,292, exceeding by 71% what was done in 2020, benefiting almost 90,000 families,” he stressed.

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

With respect to the electric power sector, he said that in the 2020 administration the installed power stood at 45 Megawatts (MW), while in 2021 it was increased by 617 MW and is programmed to increase to 671 MW, thus guaranteeing 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%, reaching a power of 578 megawatts,” he emphasized.

LITHIUM INDUSTRIALIZATION ADVANCES

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

This will be enabled by the reactivation of pilot and industrial scale plant operations, installed in the middle of the Uyuni salt flats in the department of Potosí, according to official data.

Vice-Minister of High Energy Technologies Álvaro Arnez said that state-owned YLB expects to close the year with record sales of products such as potassium chloride and lithium carbonate.

According to the official, the world needs lithium, mainly due to the increase in the electric vehicle industry, so “Bolivia cannot afford any more delays in the soft metal issue, next year we will need to proceed with industrial plants.”

MUTÚN, MAIN MINING ACHIEVEMENT

President Arce said that upon 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 shutdown in activities following the change in government.

He pointed out that during his administration, the Lucianita Mill of Empresa Minera Huanuni (EMH) began its productive operations, with an output capacity of 3,000 tons 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 tons per day.

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