Bolivia’s government talks about economic reactivation; sectors say it is lying

RIO DE JANEIRO, BRAZIL – A few days ago, the Minister of Economy and Public Finances, Marcelo Montenegro, declared that the government is “making every effort so that the welfare of the population continues to be maintained, it is a very complicated situation, but we do it with the purpose that the Bolivian people have price stability”.

According to Montenegro, inflation is under control at 0.8%. Exports are growing by 34%, from US$3.1 billion (in 2021) to US$4.2 billion in April. Imports in raw materials and capital goods increased by 33%, from US$2.6 billion to US$3.5 billion.

But these data are questioned by economist and public policy specialist Dario Monasterio.

“Here there is an inaccuracy regarding inflation, we had in the April 12-month indicator a 1% inflation and 12 months in May it already rose to 1.40%, that is to say, that in May we already had a 40% higher inflation than in April of the last 12 months, there is an increase in inflation which is undeniable due to the imported inflation we have in Bolivia.

“We produce very little food, and we import it in many forms, including smuggling, so there is a problem of inflation even though there is a slowed demand that has also generated that prices do not rise as much, but still the trend is quite strong to an increase in inflation in the coming months,” he explains.

In recent statements, the president, Luis Arce, said that Bolivia improved the economic and social indicators after a poor administration of the transitional government and the adverse effects left by the COVID-19 pandemic.

And according to the page of the Ministry of Economy and Finance, “the stability of prices of the family basket was one of the aspects that reflects the good indicators of the economy and the results of the measures implemented by the Government, while neighboring countries are going through high inflation rates”.

The Minister of Economy highlighted the increase in the invoiced sales of restaurants and air tickets as “indicators that reflect the reactivation of the economy”.

According to data from the Ministry of Economy and Finance, “the invoiced value of sales in restaurants, between April 2021 to April 2022, rose by 20%, and the invoiced sales value of air transport rose by 107%, to April with the management 2021″.

For Monasterio, “all the indicators used by the government are lying indicators regarding the economy’s recovery. You can not make a comparison of restaurants between April 2021 with April 2022 because, during the pandemic, precisely the hardest hit were the restaurants.

“Now they have obviously recovered economic activity, and in a sector that has been so hard hit, growth can be enormous because the base on which we are comparing is a very low indicator. The same with air transport, which was practically at a standstill due to the pandemic”.

The tourism sector agrees with economist Darío Monasterio. The president of the hotel sector in Bolivia, Luis Ampuero, says that “the government has a very biased view; it sees data that the private sector does not see. We were on the ground, and now we are beaten, trying to get back on our feet but still beaten.

“In the last two weeks, I have been in Uyuni, Copacabana, in Sucre, and things are practically stagnant; there is only incipient tourism. Colleagues can validate the information. It cannot be called reactivation in any way”.

Several tour operators and restaurant owners consulted by Bloomberg Línea agree with his opinion. Regarding airline tickets, they indicate a slight improvement in sales, which is only due to the school vacation, but they point out that it is still not possible to see a growth equal to the pre-pandemic numbers.

And in the restaurant sector, the owners consulted are just recovering some of the investment and the time they were closed due to the pandemic.

In response to the sectors that indicate that the economic reactivation is not being felt, Minister Montenegro said that “these are perceptions”.

With information from Bloomberg Línea