Evo Morales will inherit a healthy economy when he becomes Bolivia's president next month, but a freeze in foreign energy investments and lingering social unrest threaten the rosy outlook.
"I'd say these are the best macroeconomic conditions the country has had in the last 10 years," Central Bank President Juan Antonio Morales said on Friday.
"And if we add to this situation the pardoning of the debt, conditions are much better," he said.
The International Monetary Fund (IMF) agreed this week to forgive US$222 million owed by Bolivia to the agency, 4.5 percent of its total foreign debt. Bolivian officials are expecting the World Bank to follow suit.
Morales welcomed the IMF's decision and said he will seek "a total pardoning of the foreign debt."
In recent elections Morales garnered more popular support than any president since democracy was restored in the Andean nation two decades ago. On Friday he had 53.7 percent with 99.8 percent of votes counted.
The country's economy is healthy by Bolivian standards, with GDP growth this year of 3.9 percent and similar performance expected next year. GDP expanded by 3.6 percent last year.
Inflation is forecast to end this year at 4.2 percent, down from 4.6 percent last year, in a country that has long suffered periods of hyperinflation.
Bolivia also slashed its fiscal deficit to an estimated 1.5 percent of GDP this year, down from 5.5 percent last year.
"Economic conditions are totally favorable for the new government," Finance Minister Waldo Gutierrez said on Friday.
But many challenges loom for Morales, who will be inaugurated on Jan. 22.
Investment by foreign oil and gas companies is on hold because of political unrest that began last year. Companies are also waiting to see what sort of investment guidelines the new administration will put in place after Morales has said he will nationalize a gas exploration and production industry dominated by foreign companies.
Morales also must deal with protests by iron ore workers, who closed down part of the border with Brazil after the government put a hold on a mining deal that would lead to several thousand jobs.
The protests, centered in the city of Puerto Suarez on the border with Brazil, entered their second day on Friday. Caretaker President Eduardo Rodriguez said the decision to postpone by 60 days a public bidding for the exploitation of El Mutun iron and magnesium deposits was made "because the new government needs time to get informed."
One of the protest leaders, Erik Genicke, said that if the project is not authorized as planned, more radical protests would be organized.
"If there are lies by the current government and by the government to be inaugurated in January, then there are serious conflicts ahead for the government of Evo Morales," he said.
It's estimated the mine would yield 1.5 million tonnes of iron and earn US$250 million a year.
The protests come on the heals of a strike by interstate bus drivers last Wednesday over a government decree ordering them to give receipts. Officials say they have been evading taxes.
But there was good news on Friday for the president-elect.
The EU has agreed to his request to help determine how much of Bolivia's coca production and consumption goes to legal uses, and how much of the leaf is used to make cocaine.
The EU will contribute the US$500,000 needed to finance the study but will not participate in its implementation, said Angel Gut-ierrez, First Secretary of the EU mission in Bolivia.
Morales still has his own coca farm and came to prominence as the leader of a group of coca growers opposed to US-backed coca eradication efforts. He's often called for research on what exactly happens with the coca leaf now grown in 27,000 hectares across the country.
Coca leaf is used to make cocaine, but also has some legal uses, including in ancestral religious ceremonies.
Morales says he wants "zero narcotrafficking" while also preser-ving the plant's legitimate uses.
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