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 concern. Whoever turns into the nation’s subsequent president faces a really tough job to attempt to type out the mess.

El Alto is Bolivia’s second-largest metropolis, dwelling 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 slim streets with distributors attempting to promote you all the pieces from oranges to knock-off designer trainers. Standing on a pavement, automobile mechanic Josue Macias is having fun with an ice cream together 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 pieces are going up, however we’re nonetheless incomes the identical,” he says. “We’re nearly getting by, however it’s exhausting 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 once.

“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 brought on by a mix of things. Falling pure gasoline 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 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 avenue protests throughout the nation.

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

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 straightforward to refill with petrol. Now I need to look forward to round 4 to 6 hours on the gasoline 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 won’t put our fares up as a result of if we do, we cannot have any clients. It could be too costly for them.”

For nearly 20 years the Bolivian authorities stored gas 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 stated Bolivia was working out of domestically-produced pure gasoline, attributable to an absence of funding in new exploration.

With out this gasoline 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 accordance with a current assertion by a former minister of hydrocarbons and power.

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

The official alternate price of Bolivia’s foreign money, the bolivianos, is definitely not serving to issues. Since 2011 the federal government has mounted the alternate price at 6.96 bolivianos to 1 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 overall supervisor for the Bolivian Institute of Overseas Commerce, explains: “A product that prices seven bolivianos right here in Bolivia may be bought for 15 bolivianos overseas,” he says.

“The issue is that companies would like to promote objects on the [overseas] black market fairly than right here in Bolivia which ends up 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 concerning 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 exhausting proper now for me to maintain a enterprise.”

Many individuals in Bolivia are hoping {that a} new authorities will have the ability 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 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 shall be a second spherical of voting on 19 October.

Bolivian political scientist and analyst Franklin Pareja is sceptical that the following administration will have the ability to enhance most individuals’s lives.

“The inhabitants is assigning a change in authorities nearly magical qualities, as a result of they assume 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 exhausting affect 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 non-public sector. The driving 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 rules, 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, will not be anticipated.