Chaos at Bolivia's Central Bank
La Paz, Bolivia
The 27-story Central Bank tower here is the tallest building in Bolivia. It may also be the emptiest. About two-thirds of the bank's 1,200 employees quit in March when the government offered them generous severance payments.Skip to next paragraph
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A dramatic shrinkage of the institution's work force was President V'ictor Paz Estenssoro's solution to end corruption and break the power of a militant union that shut down the Central Bank at will under the previous government of Hern'an Siles Zuazo.
But so far, President Paz's plan has caused as many problems as it has solved, as 200 employees more than the government expected quit, including almost the entire professional staff.
This has left bankers furious, because the Central Bank no longer has a staff able to regulate the banking industry or provide statistics on the economy that banks - and government agencies - need to carry out their duties.
``The government has replaced anarchy caused by the union with anarchy caused by administrative incompetence,'' said Miguel Fabbri, general manager of Banco Nacional de Bolivia, the country's largest bank.
Private bankers agree with government officials that Mr. Paz had to curb the power of the Central Bank's union. Taking advantage of the chaos caused by an inflation rate that eventually spiraled to 24,000 percent, the union came to dominate the Central Bank during Mr. Siles' 1982-85 presidency.
Union leaders regularly blocked Central Bank decrees they opposed and called frequent strikes to demand greater pay and fringe benefits.
At one point, union leaders telexed Bolivia's finance minister in Washington, where he was negotiating with the International Monetary Fund, saying he had no right to represent the country, since he had not consulted with them beforehand.
Paz took office two years ago this month, determined to impose radical policies to stop the hyperinflation cold and halt the Marxist-dominated union movement, which he believed responsible for the country's economic woes.
He laid off 23,000 of the 30,000 miners in the inefficient state tin mining company. He fired thousands of other government workers and froze salaries for those kept on. And earlier this year he devised the incentive plan to encourage Central Bank employees to leave.
Paz offered each employee a lump-sum payment of $5,000 and a year of free medical care, along with the standard severance pay of one month's salary for every year worked.
The bank's economists, computer specialists, and research analysts, tired of the strikes, political infighting, and decline in the bank's prestige, found the offer too good to pass up.
``To the government's surprise, all of the qualified people left,'' said Javier Hinojosa, who, with five members of the statistical analysis division he headed, left to form a private financial company. ``The least able people stayed behind.''
Employees who remained could not find the documents they needed because departing workers had tossed them out the bank's windows in a paper blizzard. Bolivia fell into arrears for two weeks in March with the Inter-American Development Bank because no one knew how to operate the Central Bank's telex machine.
The IMF twice had to postpone fact-gathering missions because the Central Bank was unable to collect the necessary economic data. With the institution's entire computer section gone, the Central Bank hasn't been able to compile a daily list of its transactions.
Bankers and businessmen who relied on the Central Bank to provide the country's only accurate statistics on employment, inflation, economic growth, and the monetary supply, are fuming.
Central Bank director Fernando Paz admits the massive layoffs have caused problems. ``But that's the price we've had to pay for ending a situation that couldn't be sustained,'' he said. ``We're hiring some new people and giving them training. Soon, everything will be back to normal.''