Facing an economic decline, challenges lie ahead for Bolivia

Facing an economic decline, challenges lie ahead for Bolivia

Although the subnational election results in March confirm MAS’s overall leadership in Bolivia, the close call serves as a reminder that MAS needs to do more to strengthen their control.  Social and political changes must occur in order to prevent economic obscurity in Bolivia. 

After nearly a decade of political domination, President Evo Morales’s Movement Toward Socialism (MAS) party suffered an electoral setback in regional elections for governors and mayors on March 29, 2015.

Popular uprisings helped paved the way to the 2005 election of Evo Morales, the country’s first indigenous president and a leader who promised to bring socialist and anti-imperialist changes to the indigent but resource-abundant nation. The campesino and indigenous movement leaders of the 2000s are mainly aligned with MAS.

Last October, Morales won re-election to a third term with 61% of the vote.  Opposition candidates won the governor’s office in the La Paz region and the mayor’s seat in El Alto, the capital’s poorer sister city. La Paz’s opposition mayor, Luis Revilla, was re-elected.

Now, in early 2015, the governing MAS party is less popular and has been continually plagued with corruption scandals, critiques concerning heavy dependence on extractive industries, and high levels of violence against women.

With economic obscurity in countries like Argentina, Brazil, and Venezuela, and with the value of gas exports to major markets decreasing by almost 30% since 2014, Bolivia faces challenges that could bring about a decline in the nation’s agriculture business and manufacturing exports. Luís Arce, Finance Minister for Bolivia, recently lowered GDP growth projections for 2015 to 5%.

However, a continuous decline could some conditional transfer programs at risk, such as the two-month wage or doble Aguinaldo (compensation) granted by law in the last two years. In addition, the bonos (conditional cash grants) programs are financed chiefly through hydrocarbon profits, as is much of the state’s funding to subnational levels of Bolivia’s government.

New data from the International Monetary Fund states that economic growth in Latin America and, by extension, Bolivia has declined for the fourth consecutive year. Thanks to record-low global product prices and continuing political problems, growth isn’t expected to rebound anytime soon. A continued decline will surely add fuel to both political and economic instability.

The MAS government program ratified in last year’s election plans a major focus in the next period on manufacturing initiatives and an expansion of the domestic market to boost provisions and industrial self-sufficiency. Furthermore, the initiatives offer an alternative to current restricted programs concerning education and health by expanding upon nationwide programs. In order for the government to bring Bolivia out of economic obscurity, the ratified programs promised to the people need to be transparent and readily assessable.

Future success in Bolivia will require much-needed social and political changes that can expand a better-served democratic system, integrate engagement and advocacy practices, and help to overcome old and simplistic modes of thinking and action.

This particular mindset needs to be present, especially in social movements, so that the when the public meets with leaders from Morales’ MAS party, they have the right approach to discuss economic opportunities and the road ahead.

Categories: Latin America, Politics

About Author

Yesenia Lugo

Yesenia Lugo has written and worked on global governance and international financial institutions (IFIs) for a Washington, D.C. NGO. Her interests include economic opportunities, emerging financial markets and fiscal transparency reform. Yesenia holds a Masters in Diplomacy and International Relations from Seton Hall University, where she specialized in economic development and international security.