Bolivia Declares Economic Emergency, Scraps Fuel Subsidies

Rodrigo Paz in La Paz on Nov. 9. Photographer: Marcelo Perez del Carpio/Bloomberg Photo by Marcelo Perez del Carpio /BloombergArticle content(Bloomberg) — Bolivian President Rodrigo Paz declared an economic emergency late Wednesday night and issued an array of dramatic steps, including scrapping fuel subsidies and loosing the country’s exchange rate regime.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentThe new regulations represent a decisive break from more than 20 years of socialist economic policy and aim to shore up public finances as inflation soars above 20%. Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle content“Eliminating poorly designed subsidies does not mean abandonment, but order, justice and real, transparent redistribution,” Paz said in a surprise broadcast with his cabinet. “This will allow the generation of additional fiscal resources to be shared between the central and regional governments.”Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentThe move triggered an 86% jump in gasoline and more than 160% for diesel, the most abrupt energy price adjustments in decades. The new prices will remain in place for six months before being reassessed. Article contentSome fuel stations La Paz city suspended sales as drivers rushed to stock up on subsidized fuel after the announcement, according to local media reports.Article contentOne of the region’s cheapest subsidized fuels, as well as declining natural gas output, has drained Bolivia’s foreign reserves, causing shortages of both fuel and dollars and creating a drag on the economy. Article contentThe subsidy cuts are accompanied by social protection measures, Paz said, including a 20% increase in the minimum wage next year to 3,300 bolivianos ($479). Article contentRenta Dignidad — a benefit for elderly citizens without a pension — will rise by 150 bolivianos ($22), while a school bonus for students in public schools will increase by 100 bolivianos ($15). Both are increases of 50%. Article contentArticle contentThe government also announced an extraordinary cash-transfer program for the most vulnerable families.Article content“This is not welfare,” Paz said. “It is support for families that have been devastated,” he said, implying the damage was due to decisions by previous administrations. Article contentThe decree also authorizes the central bank to secure liquidity financing lines, amend internal regulations, issue external financial instruments, conduct foreign-exchange hedging operations, and carry out currency swaps to stabilize the balance of payments — an option recently discussed with US officials in Washington.Article contentPaz also announced a program to promote and protect domestic and foreign investments to ensure legal and tax stability for up to 15 years. That includes guarantees that future regulatory changes will not apply to protected investments without explicit investor consent.Article contentThe decree further instructs the central bank to transition to a “new exchange-rate regime,” potentially ending the fixed exchange rate in place since 2011, which set the boliviano at 6.96 per dollar, compared with nearly 10 bolivianos in the parallel market.Article contentTrending Is a $2.75 million portfolio enough for Halifax empty nesters to retire early?

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Personal Finance Trump Official Signals Support for Trade Deal With Canada, Mexico PMN Business World watches as Ottawa's bullish shift on LNG puts wind at the back of two major projects Oil & Gas Canada's population declines for the first time since the pandemic News So long, labour shortage: job vacancies continue to decline in Canada Work