Sun, Nov 18, 2012 - Page 14 News List

Bolivia’s leftist leader ushers in economic boom

Despite his ultra-left-wing rhetoric, Evo Morales has enforced fiscally conservative policies that have won him praise from Wall Street and boosted the economy

By Helen Popper  /  Reuters, EL ALTO, Bolivia

Mining cooperatives have won political concessions from Morales and a few have grown rich due to soaring global metals prices.

In mining cities like Oruro and Potosi, newspapers carry stories of miners-turned-millionaires, luring fortune seekers from other parts of the country.

While most of the cooperative miners scrape a living working in dangerous and precarious conditions, a few have become wealthy enough to buy expensive cars and invest in real estate.

“This amazing mining boom has helped develop markets in places no one ever would have imagined,” said Christian Eduardo, president of the CADECO construction industry chamber.

Construction activity has been growing at an average of about 10 percent per year since 2007, forcing the over-stretched local cement industry to meet demand with Peruvian imports.

To the surprise of his detractors, Morales — an ally of Venezuelan President Hugo Chavez who shares his penchant for fiery leftist rhetoric — has proved a fiscal conservative. Bolivia is expected to register its seventh straight annual fiscal surplus this year.

Morales, 53, has nationalized areas of the economy from the vital natural gas industry to telecommunications companies and tin smelters, but he has also let the central bank’s foreign reserves swell to record levels and warded off the scourge of high inflation that battered Bolivia in the 1980s.

The economy is expected to grow more quickly than many of its wealthier neighbors this year and should maintain a healthy 5 percent expansion next year, the latest IMF estimates show.

“Bolivia is no longer a country with a weak economy,” Bolivian Minister of Economics Luis Arce said last month after the nation sold its first global bonds in almost a century.

Most analysts said the interest rate of less than 5 percent was low considering Morales’ record of nationalizing companies, often without prior notice or compensation, and it has proved an unlikely public relations success for him.

“The interesting thing is that Bolivia sold the bonds at half the rate paid by Venezuela. That’s an important message to the world,” said Horst Grebe, director of La Paz-based research agency Prisma. “The problem is that Bolivia’s biggest growth is in its macroeconomic numbers. What we’re not seeing is a transformation of the productive economy that is sustainable in the long term.”

Bolivia remains dependent on exports of non-renewable raw materials. Natural gas and metals made up 87 percent of last year’s record US$9.1 billion export earnings, the Bolivian Foreign Trade Institute’s Gary Rodriguez said.

Yet as Wall Street economists laud Morales’ macroeconomic policies as prudent, critics at home say he betrayed supporters by watering down policy pledges and pandering to big business.

“Since the Spanish arrived 500 years ago we’d never had an Indian president. It was the people’s dream and we thought things would be different, but six years on, he’s dishonored us,” said long-time indigenous activist Felipe Quispe, known as El Mallku, the “Condor” or “authority” in Aymara.

With six years and 10 months in the job, Morales has held Bolivia’s presidency for the longest unbroken period of any elected leader. An opinion poll conducted last month by Ipsos Bolivia put his approval rating at 53 percent in urban areas and 69 percent in the countryside.

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