The economy doesn’t lie

Hugo Marcelo Balderrama

Last week I published an article about the impending default of the Bolivian economy. Several readers understood the dramatic situation in the country. However, others refuse, refused, and will refuse to see reality. In this group are those who insulted me – anyone is brave behind a keyboard – and also those who, politely, affirmed: «You are wrong. During the government of Evo Morales, the economy grew like never before in history.

When reading the latter, I remembered several Argentine businessmen who affirmed the same thing just before their country entered one of the recurring crises of recent decades.

What were the causes for Argentina to be submerged in such a deep hole?

The country was living on credit. The catastrophe came in the same way that it will come to Bolivia: when cash is no longer enough and nobody wants to lend us.

Right now, many Bolivians believe that the unsustainable will become sustainable, or that nothing will happen to us, because Bolivia is “different.”

However, economics is a science because it has postulates that are universal, and applicable to individuals, families, companies and governments. One of them tells us that if I spend more than I earn – in addition to abusing credit – I will go bankrupt. Therefore, Bolivia, no matter how much we deny it, is not exempt from economic laws.

Entrepreneurs who provide goods and services to the State are the ones who have first become aware of the economic problems of the Bolivian government, that includes governors and mayors, because they are the ones who are not being able to collect the amounts owed. For example, in 2018, the president of the Confederation of Private Entrepreneurs of Bolivia (CEPB), Ronald Nostas, in an interview with the digital newspaper Eju.tv, stated the following:

The Bolivian Chamber of Construction has informed us that practically in all the departments there are problems with the payment of public works carried out by national companies, which causes serious damage to them, as well as companies in other sectors that are going through the same situation. .

In the same way, in June 2020, the Board of Directors of the Bolivian Chamber of Construction (CABOCO), demanded an immediate solution to the accumulated debt with the sector of Bs 2,000 million. The non-payment corresponded to unpaid forms of public investment projects executed both at the central level and subnational entities such as governorates, municipalities and universities.

The government can lessen the problems that are coming. Especially, lowering your expenses and stopping borrowing. But it doesn’t and won’t. In fact, last February, it placed 850 million dollars in sovereign Bonds. In this regard, Gabriel Espinoza (former director of the Central Bank of Bolivia), in an interview for the UNITEL television network, stated:

Bolivia has had to give three concessions, since it could not place the bonds. The interest rate has risen, the term for bond placement has decreased, and the value of the bonds has risen, and even so it has not been able to reach two billion dollars. Most of the bonds were acquired by the AFPS operating in Bolivia, as well as by financial entities in the country. This year we are going to pay close to 700 million dollars in sovereign debt, in addition to that which has been rescheduled, and this is going to increase over time.

It is paradoxical, if not fatal, that the government is using the resources of the workers to finance an enormous political and bureaucratic apparatus. One more proof that socialism is, at the end of the day, just looting.

The economy doesn’t lie, but the politicians do. Therein lies the mother of the lamb. Well, when the mirage of credit ends, and the bills have to be paid, the MAS will transfer the bill to the ordinary citizen.

You hurt Bolivia!

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