President Rodrigo Paz’s government sent the Bolivian Legislative Assembly a memorandum of understanding with the International Monetary Fund (IMF) that contemplates a severe program of cuts and financial impositions to access external financing worth US$1.9 billion, to be disbursed over the next three years.
The 19-page document’s central objective is to reduce the fiscal deficit from the current 9.1% to 3.8% by 2028, imposing a neoliberal roadmap based on the total elimination of state subsidies, the absolute liberalization of prices and the freezing of salaries in key sectors of public administration.
Among the most drastic measures agreed with the multinational organization is the definitive cancellation of fuel subsidies, scheduled for January 2027, following the precedent of the 100% increase applied last year.
Likewise, the pact stipulates the gradual elimination of subsidies for electricity and natural gas, the suspension of price controls on basic goods and the complete liberalization of food exports, together with the purchase of foreign currency from private banks by the Central Bank, a factor that will cause a greater devaluation of the national currency and a general increase in the cost of living.
A drastic blow to the working class and a wage freeze
Several analysts and social sectors reacted with concern to the size of the adjustment. They pointed out that the IMF’s demands shift the entire burden of the crisis to the middle class and the most vulnerable sectors of the population.
The regulatory package includes an explicit freeze on salaries in essential sectors of the State, which will directly affect teachers, doctors, police officers and members of the Armed Forces, as well as a general increase in interest rates for consumer and real estate loans.
Although the Executive Branch plans to provide temporary bonuses as a social mitigation mechanism against rising inflation, the memo itself warns of the imminent risk of a “resurgence of social unrest” caused by deteriorating purchasing power.
At the same time, the approval of this fiscal agenda by the Legislature would serve as a key to condition the arrival of another US$3 billion in debts from entities such as the Inter-American Development Bank (IDB), CAF and the World Bank.
Defense and privatization package with high tax burden from the Executive
Despite the evident bias of the IMF’s agenda, government authorities defend the agreement, arguing a supposed autonomy in the adoption of the economic package and classifying it as a measure of financial responsibility.
Authorities from the Ministry of Economy stated in this regard: “This is not an imposition from the International Monetary Fund, but rather a matter of economic responsibility that we have implemented since we took over the government.”
However, the memorandum expressly commits the Bolivian State to coordinate directly with IMF technicians the definition of the dollar exchange rate and the possible implementation of new taxes.
With this decision, the Executive takes a step back on the path of economic sovereignty and industrialization with social justice built in recent years, subordinating national development to the old structural adjustment recipes promoted by Washington.
Source: www.brasildefato.com.br
