Many analysts see with good eyes that in Bolivia fuels do not rise in price. However, they forget a basic detail of the economy: there is no such thing as free. Therefore, if in Bolivia the cost of a liter of gasoline is 0.54 dollars, but the international price is around 2 dollars, that difference is covered by the State.
The hydrocarbon subsidy costs us about 1,000 million dollars a year. That huge amount is one of the main causes of our fiscal deficit. Unfortunately, there is no visible measure that goes in the right direction. The government behaves like that boy who, instead of deep cleaning his room, hides the dirt and clutter under the bed. You have to be too shameless to show off that disaster as an example of economic management.
On the other hand, artificially low prices generate a serious problem of misinformation and bad economic decisions. I explain.
Prices show us relative abundance or scarcity. For example, if something is badly needed—but hard to produce—its price will go up. This in turn shows us what things we can buy and what we can’t. In short, prices tell us how far we can stretch our feet without running out of blanket. There the mother of the lamb. Well, if I subsidize gasoline and other fuels, I am telling the public that the cost of fuel is not a determining factor when choosing a car. Don’t worry about buying a vehicle with a high-consumption engine because fuel is not expensive.
However, thinking that things are “cheap” leads us to economic waste and to live in a bubble. If we start to spin fine, we can say that having a low IPC is more of a problem than a virtue. Since, by preventing an efficient allocation of resources, it makes us uneconomic.
In addition, notwithstanding the above, in Bolivia there is a lot of inflation. But it is not found in the prices of food or other products of that type, but in durable consumer goods such as houses, apartments or land, falsely considered the engine of recovery.
In this regard, Mauricio Ríos García, economist and investment advisor, in an article entitled: Low CPI and high inflation in Bolivia, states the following:
Of course, in Bolivia there is inflation, and a lot of it. It is outside the CPI, in real durable consumer assets, and it is not recent, but if the CPI is not manipulated today (I do not know) it is low because it was not stimulated in the face of the quarantines as originally intended. It happens that the MAS boycotted Áñez’s stimulus initiatives, which ranged from $2,000 million to $8,000 million (a real and irresponsible delusion). Luckily it didn’t happen, precisely because today the pressure on the exchange rate would be even greater or they would have already savagely devalued. It was a new unintentional success of the MAS.
Although Arce Catacora and Marcelo Montenegro do not miss the opportunity to sing their siren songs about the success of their model and Bolivia’s low CPI, this is still a sustained fantasy about one of the worst economic decisions: the increase in debt .
And it is that no matter how much the Bolivian regime spends millions on advertising to try to convince us otherwise, the country is going through a deep economic crisis. It is also evident that Bolivia’s macroeconomic stability rests on pins.
But there is something even more worrying. There is no democratic institutionality in the country, not to mention respect for private property. The business sector is constantly threatened and harassed. Ergo, foreign investment is not going to come, and national capital has long since begun to migrate (it is the best they could do).
Poor Bolivia! Literally.
“The opinions published here are the sole responsibility of their author.”
