We need to differentiate between two stages in Bolivia’s economic growth, which is before and after January 2006. Before this year, growth was centred only on foreign trade, which depended on international prices for raw materials. While mining and hydrocarbon sectors continue to expand because of high prices, as they did last year, there has been an important psychological factor since January.
There is greater confidence in the economy, and Bolivians have more faith in the country. The polls show that Bolivians believe the country is moving forward, that we have greater prospects as a nation. There has been a significant reduction in events that harmed the country, such as strikes, marches and roadblocks. We are living through a kind of pacification in the country compared to recent times, which is a good sign to the international community.
With president Evo Morales, we have achieved social peace that is necessary for the country to develop. Politically, the country is experiencing a key moment, without the polarization we witnessed in the recent past. There is a better climate now than a year ago, which has led to higher levels of consumption. Like in any society, when consumption improves, there is a multiplying effect throughout the economy.
It is true that the economy is based on mining and hydrocarbons, but the climate is a big factor. It is very different talking about 2005 and today. The business sector, which was holding its breath to see if this was going to be some kind of “socialist regime”, has realized that we are focused on guaranteeing macroeconomic stability. We have stabilized stability.
What do I mean by this? Basically, the fiscal deficit that existed was financed by external sources, loans and donations. We have changed this, because as a country we cannot depend on donations our whole life. We have started to broaden the tax base and will incorporate sectors that have not been paying taxes. We need a permanent, stable and consistent source of income that allows for spending to be covered, and not depend on loans.
So, the only radical change we are implementing in fiscal policy is that we are only going to incur debt for investment purposes and not for general spending. It is an orthodox approach with a twist. We need to broaden the tax base and rationalize spending, instead of only cutting spending.
Our model is for an economy based on solidarity, which means an economy that is participatory and inclusive. We are striving for common goals for all Bolivians. We want the rural indigenous people and the urban resident with a western culture to be able to reach out their hands and flick on the lights, or open faucets and have potable water. We want all people to have the same living conditions. This would be a huge step forward for Bolivia.