Gonzalo Chavez Alvarez*
Contrary to mere mortals, Bolivia has the privilege of having two mothers-in-law: the bad and nosy one, the International Monetary Fund (IMF) and the good and sneaky one, the World Bank (WB). Both arise after the Second World War when the international economic system was created under the hegemony of the United States. The IMF had the objective of facilitating commercial and financial transactions and the World Bank to promote the development and reconstruction of economies. In the 1990s they acquired a more prominent role, because, on the one hand, they financed developing countries and, on the other hand, they imposed what was known at the time as cross-conditionality. A series of structural reforms with a strong neoliberal content.
Due to the failure of a type of globalization, the emergence of strong economic nationalisms and finally, the pandemic, which ended up changing the structure of economic power in the world, the role of these international organizations was strongly questioned. Now, the world economic system is in a process of profound change. The IMF and the World Bank face very big reconversion challenges that apparently did not reach the Bolivian desk, because they continue with the rhetoric of the structural adjustments of the 1990s.
Indeed, a few days ago the IMF, after praising the national economic policy, proposed to the Government to drop a neoliberal bomb on the revolutionary economic paradise as a way to solve the serious fiscal problems, the exchange delay, and other problems of the Bolivian economy.
Of course, the nomenclature of power brought out its anti-imperialism recently polished by propaganda and sent the lady of the IMF to the fifth of hell.
Then he very politely received the second mother, the BM, obviously in search of his money. This veteca was more affectionate and sent sweeter kisses to the economic model. The national administration gratefully opened her pretty little eyes and she blinked like Clarabella. And she sighed heartily: “we are doing wonderfully, we don’t say so, even the international mothers-in-law recognize it. Opinionary satraps learn to prostrate themselves in front of our model”.
But the two mother-in-laws agree on something: economic growth this year will be around 4% and by 2023, product growth will be around 3%. Both projections contradict the applied and praised son-in-law. But the national sapling knows that, despite the revolutionary rooster poses, they need the fresh financial resources of these international organizations because they are scraping the pot.
Given the fiscal problems and financing needs, especially for public investment, the Government seeks to borrow. At present, the external debt would represent 28% of the gross domestic product (GDP), however, according to international parameters of financial solvency, up to 50% of the GDP could be indebted without problems. This means something like $8 billion of loans that would allow it to continue to belly-bump economic growth and stability.
According to the Central Bank of Bolivia (BCB), as of December 2021, Bolivia owes multilateral organizations the value of 8,699 million dollars, which represents 68.5% of the total. Bilateral debt with countries is 1,904 million green. To whom we owe the most is the Chinese. The debt with international private markets is 2,000 million dollars. Total 12,697 million dollars or 31.2% as of December 2021.
Certainly, the best financing options are multilateral organizations. In fact, in recent weeks the Government has contracted 400 million dollars of money from the Andean Development Corporation and is awaiting the approval of another 1,200 million dollars from other supranational organizations. It is in this context that the approach to the less bad mother-in-law is understood, although she has less money, the BM. The IMF mother-in-law could give us ‘big money’, up to 3,000 million dollars, but the lady would squeeze the icing on the cake in fiscal terms. Borrowing in private markets is more difficult, money is very expensive. The best option for bilateral loans is the Chinese, but they are loans from suppliers. Money is coming, but you must hire their companies and buy their machinery. In this case the road infrastructure. So from a pragmatic perspective we had to get closer to our two beloved mothers-in-law and bargain hard. They have also changed, as shown by the relationship with the wayward son-in-law that is Argentina. PS I clarify to the public opinion that my mother-in-law is a saint.
