Bolivia is dying | Duty

On August 29, 1985, Victor Paz Estansoro issued the historic and controversial Supreme Decree No. 21060, which changed the existing economic model, stopped hyperinflation and put public finances in order. The dire economic and financial situation that the country was experiencing required new economic policy solutions to address the root causes of the crisis, which had assumed the characteristics of a real national collapse and had caused a general loss of confidence.

The former president diagnosed that hyperinflationary factors, combined with a deep economic recession, have dangerously weakened the productive apparatus and triggered a severe economic crisis that has been particularly punishing for most countries. The severity of the crisis and the sharp decline in the purchasing power of wages have led to shortages of essential products for mass consumption, unemployment, underemployment and an abnormal growth of the informal or illegal sector of the economy.

In the vision of the former president, it was necessary to adopt a realistic and pragmatic new economic policy that addressed the core causes of the crisis within a framework of rational fiscal, monetary, exchange rate and administrative adjustments in the state sector. These measures, in addition to their radical anti-inflationary content, defined the basis for restarting, redefining and directly liberating national development, giving it a profound social content to save the moral values ​​of the Bolivian people.

21060 establishes the mandatory sale to the State of one hundred percent (100%) of foreign exchange earned from the export of goods and services by the public and private sectors, deducting only the costs of realization or processing expressed in foreign currency. However, the National Bank, commercial banks, exchanges and natural or legal persons are authorized to carry out currency buying and selling operations under their own responsibility. Foreign currency obtained in official public sales operations of the Central Bank of Bolivia may be freely acquired or used by its purchaser (Articles 4-5).

Another extraordinary measure is the establishment of a “regime of free importation of goods, with the exception of goods that affect public health and/or national security”. In fact, goods and services in general begin to be exported freely. It also clarifies that any industrial, artisanal, mining, agricultural or other product grown or produced legally can be exported without the need to obtain a prior permit or license and pay royalties and withholding taxes and deposits established under this decree. Exceptions are made for goods that are covered by the provisions of current legislation and concern national security, control of narcotics and dangerous substances, protection of flora and fauna, and protection of the national artistic heritage and cultural treasures.

Likewise, the Bolivian Petroleum Company (YPFB) sets and adjusts every two weeks the prices for the sale of hydrocarbons in the domestic market of the Republic, based on the average official exchange rate of the Bolivian peso to the US dollar of the previous two weeks. . Consumers are charged 0.30 (thirty cents), including a tax on gasoline with an octane rating between 82 and 85 per liter. For other gasoline, the price is strictly proportional to the octane rating. For other petroleum derivatives, the price ratios established by YPFB are maintained, justified by technical-energy assessments and the domestic and industrial use of the products.

The measures mentioned above are very different from those that Victor Paz Estansoro had to implement during his first term in office. Despite their unpopularity and high political and social costs (profound but necessary surgery), this politician undertook them and he never thought of mentioning the possibility of seeking some type of consultation or something of that nature. These are some of the measures that the Luis Arce government must take, the sooner the better. In essence, the controversial 21060 policy is at its best; it must be applied to stop the current economic catastrophe and prevent us from falling into the abyss.