Bolivia's uphill pull

August 14, 1985

FEW newly chosen presidents have ever been confronted by more daunting challenges than those now facing Bolivia's top executive, V'ictor Paz Estenssoro. His nation's economic, political, and industrial systems are in disarray. Inflation soars well over 1,000 percent a month, and the labor unions have been in revolt against attempts by his predecessor to slow it. Production has plummeted at the tin mines, a prime past source of wealth; the main profitable industry is the growing of plants that are the raw m aterial for cocaine. Bolivia's immediate needs are clear: a dramatically slowed inflation, a rejuvenated economy, and diminution of pervasive corruption.

There is an important role for the international financial community while Mr. Paz is trying to straighten out Bolivia's domestic chaos. Those nations or international banks to which Bolivia owes nearly $5 billion will have to be patient: Like many other developing nations today, Bolivia requires debt restructuring. At the same time the international community should not insist on harsh austerity measures. As the widespread strikes indicate, there is a limit to the willingness of the average Bolivian to

endure further austerity now, especially if he considers it aimed inequitably at one sector of the population.

Paz has the asset of experience. He has been President three times before. He has something even more important in his favor -- a deep yearning by many citizens for an end to the turmoil, for a period of stability. Bolivians might well accept anti-inflation measures that they believe would affect all segments of society equitably and would be effective. But they have seen such a revolving-door system of governments over the past 20 years that they have lost faith in their government's capacity to solve problems or even remain in office.

Fundamental to success for Mr. Paz is the ability to persuade his fellow Bolivians to have confidence that he and his government can improve the situation. From this increased confidence would flow important support for the economic reforms that the Paz government must undertake.