Bolivia Works to Reduce Debt, Raise Living Standards
LA PAZ, BOLIVIA — TO Oscar Farfan Mealla, a consultant for the Regional and Development National Fund (FNDR), democracy in Bolivia includes a free market. To many Bolivians, democracy also means long-awaited political stability. Bolivia has endured more than 180 coups in the 168 years since independence.
The nation, observers say, moved in that direction with presidential elections Sunday. Gonzalo Sanchez de Lozada, an English-speaking mining executive who was raised in the United States, claimed victory Monday.
(He promised to work for a government based on social justice, honesty and change, according to the Associated Press. Thousands of supporters cheered Sanchez de Lozada, his running mate, Victor Hugo Cardenas, and their wives when they spoke at a victory rally in this high Andean city shortly past midnight.
(Sanchez de Lozada, who must be formally voted into office by Congress in August, comes from a wealthy land-owning family. Cardenas, an Aymara Indian intellectual and educator, grew up in an adobe hut three miles above sea level near the shores of Lake Titicaca.)
In an interview, President Jaime Paz Zamora says it was necessary for his administration "to place a marginal nation back in the world."
The president's travels abroad, for which he has been criticized, have brought in large sums to Bolivia and have reduced the external bank debt, according to an official source.
This is the first time a developing nation has completely wiped out its debt with commercial investments, explains Roberto Jordan Mealla, executive director of FNDR.
But it is only the country's private external debt that has been cut, according to a recent Latin American Weekly report. At a meeting in Hamburg last March, the nation reduced the $170 million it owed foreign commercial banks to $90 million. Bolivia's total external debt was reduced by only 4.5 percent, from $3.77 billion to $3.6 billion.
In a recent United Nations report, Bolivia, Haiti, and Honduras were cited as the poorest and most undeveloped countries in Latin America. "Bolivia is so poor that it's like a begger asking for help, but the problem is that the more help we receive, the less we are able to help ourselves," Mr. Farfan says.
Bolivia continues to rely on foreign aid, in the form of debt reductions and bank loans. The European Community sends the country $350 to $400 million annually. United States aid is estimated to be around $180 million, $30 million of which goes toward anti-drug efforts.
"Seventy-five percent of foreign aid is directed to public investment," says Carlos Alberto Lopez, an official in the Ministry of Planning and Coordination.
Over the past four years, roads and railways have improved, providing an economic boost to commerce, Mr. Paz Zamora says. "Economic growth is said to have reached 4.1 percent, while inflation is under 10 percent."
Paz Zamora notes some other positive changes that have occurred during this administration: The infant mortality rate has decreased by 50 percent; the illiteracy rate has dropped by 20 percent; and unemployment is down to 6 percent, although 40 percent of Bolivians are underemployed.
But some analysts say that the free market economy, or "neoliberalismo," begun in 1985 under Victor Paz Estensorro, has only increased poverty and widened the gap between rich and poor.
In 1985, inflation in Bolivia was at 24,000 percent. Mr. Paz Estensorro introduced a new currency, the boliviano. Gas prices went up; public sector wages were frozen for four months; price subsidies were eliminated; and currency controls were lifted.
A social emergency fund was established to help bridge the new economic program and the social crisis.
"We have inherited poverty way before 1985," Paz Zamora says. "Today we are able to do for the poor, thanks to economic reforms that our government had to make."
At about 11 percent a year, inflation is now under control. The national economy has grown at an annual average rate of more than 3.5 percent over the last six years, according to the Economic Commission for Latin America report (ECLA).
Paz Zamora says when he steps down on Aug. 6, he will be satisfied with what his administration has done over the last four years.
"Bolivians have a new mental vision of themselves," he says. "They have had to learn that they are winners, not losers."