Bolivia’s economy: the key to Evo Morales reelection

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Despite the political climate in Bolivia, the economic achievements of Evo Morales government testify the constant economic growth

In 2016, a constitutional referendum was held in Bolivia. The purpose was to consult about the elimination of the re-election limit, allowing Morales to launch a presidential candidacy that could give him his fourth consecutive term. However, with a majority of 51.3% of the votes, the decision not to carry out the constitutional reform won the referendum. Despite this, in 2017 the Constitutional Court endorsed indefinite re-election, based on the recognition of the American Convention on Human Rights signed by Bolivia.

Leer en español: El éxito económico de Bolivia: la clave para la reelección de Evo Morales

Given these events, there is an atmosphere of rejection of the Morales government. For example, according to the newspaper El Deber, a poll of intention to vote made at the end of December 2018 puts the main opponent of the current government, former president Carlos Mesa, five points above Evo Morales. Despite this, as reported by the BBC, current government supporters say that the president has not begun to campaign and that, when he does, it will be shown that he is still the politician who can get the most votes in Bolivia.

One point on which the electoral campaign of Evo Morales could be supported is the economic growth that Bolivia has achieved during its three presidential terms. Recently, the minister of economy of the government of Morales, Mario Guillén said that "these 13 years Bolivia has been an example in the region, we are an economy that grew steadily, in a sustained manner." These statements are supported by those of Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), who in September 2018 said that ECLAC puts "Bolivia as an example in the region of how it can be managed. very orderly macroeconomic policy and a very inclusive social policy".

According to the Peruvian newspaper La República, Morales attributes the Bolivian economic boom to the nationalization of Bolivian hydrocarbons in 2006, making oil and gas resources the central source of the country's economy. The following are some of the economic achievements of the Morales government.

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The rise in GDP

According to World Bank data, Bolivian nominal GDP has increased considerably since 2005, when it was at USD $ 9,549 million, compared to the current USD $ 40,500 million reported by La República. The same Evo Morales, in his annual management report given on January 22, 2019, highlighted the growth of 327% of Bolivia's nominal GDP.

According to the Chilean newspaper Pulso, during Morales' tenure, the Bolivian economy has grown by 4.9% annually, which exceeds the regional average of 2.7%. This growth seems to be maintained in the future, since, as reported by the Chilean newspaper El Ciudadano, Bolivian GDP growth of at least 4.7% is projected, which is similar to that of recent years.

The reduction of external debt

In November 2018, Pablo Ramos, president of the Central Bank of Bolivia (BCB), assured that the Bolivian external debt had reached USD $ 9.830 billion, registering the highest external debt figure in the country's history. However, despite this, it is also noteworthy that this debt increasingly represents less of the Bolivian GDP. According to sources such as Telesur and El Ciudadano, in 2005, Bolivian public external debt represented 52% of nominal GDP. In contrast, by 2018, this debt only accounted for 24% of GDP, making Bolivia the seventh least indebted country in South America according to Morales.

Control of inflation and wage increase

At the end of 2017, the National Institute of Statistics (INE) reported that inflation had risen by only 2.7%, the lowest since 2009 when, according to the Central Bank of Bolivia, there was an increase of only 0, 29%, during Morales' first presidential term. Surprisingly, according to El Ciudadano, the rise in inflation during 2018 was less than in 2017, registering an increase of 1.51% despite the official prediction of 4.49%.

It is important to compare these figures with the salary increase that has taken place during the Morales presidency. If you review the Supreme Decrees established by the Bolivian president in relation to the increase in the minimum wage since his first year as president, you can see how this has gone from Bs 440 in 2005 to Bs 2060, marking an increase of 515% in 13 years. Moreover, when comparing the wage increase with the annual inflation rate, there have only been three years during the Morales presidency in which inflation has been above the minimum wage increase (2007, 2008 and 2010).

In relation to the contrast between inflation and the wage increase, the reduction of poverty can be highlighted. Samar Maziad, an analyst at Moody's, said about the Bolivian economy during Morales' presidency that "one of the surprising things is how in the last 10 years income levels have increased and poverty has been reduced".

To support these claims, we can cite a report by Pulso, which states that during the presidency of Morales, 1.6 million people have emerged from extreme poverty. According to said report, in 2005, at least 38.2% of the Bolivian population was in a situation of extreme poverty, a figure that contrasts with 17.9% which was in that situation in 2017. According to data published by the INE, in 2005, 35% of the total Bolivian population was part of the middle class, a percentage that rose to 2017 to 58%.

Given these data, it is not surprising that in his last annual management report, Evo Morales said that "economic stability and policies to promote production have allowed inflation in Bolivia to remain low, maintaining the purchasing power of the population. "

LatinAmerican Post | Juan Diego Bogotá

Translated from: 'El éxito económico de Bolivia: la clave para la reelección de Evo Morales'