Evo Morales hands out gas bonanza fairly, critics left looking stupid

Inca Kola News

I'm getting a bit obsessed with Bolivia's finances. This post is the third time I've picked at the subject, but the reason I keep coming back is because the facts about how Evo is running the country are so mismatched to the stories told about his administration. The juxtaposition is quite fascinating (for a wonky dude like me, anyway).

In this first post, the subject was the general macro overview of the country.

This second post was about the unmitigated success story of Bolivia's hydrocarbons nationalization and how the Evo gov't is being smart with the new-found revenues.

So today's third post kinda ties the fiscal background to current politics, and specifically looks at how the hydrocarbons revenues are being distributed inside Bolivia. This is because amongst the so-called "half-moon" states (departments) of East Bolivia (namely Tarija, Santa Cruz, Beni and Pando) one of the linchpins of the autonomist arguments is that they don't want their gas and oil tax revenues (known as 'IDH') from "their" gas and oil fields to be spread
around the country. It's not fair, they say. Racist bastards I say, but instead of just fighting their fire with fire let's have a better look at the IDH revenues and how they are being spent.

To begin with, let's point you back to the second post in the Bolivia money series linked above and say that some of the hydrocarbons moolah is going to state reserves. That's smart, and nobody can deny it. Secondly, the gas money also funds the new "renta dignidad" state pension. This means that for the first time ever, Bolivia pays a true pension to its 800,000 or so citizens above the age of 60. The Bs200 (about U$27.75) per month may not sound like much to you, but the calculators say it has lowered national poverty levels by a full 2%. To say it's a popular decision amongst Bolivians is like saying the Pacific Ocean is a challenging swim.

So now let's get to the point, and here's a chart that shows the amount of money handed to the nine departmental authorities by the national government in the last four years.

It must be pointed out that at this time the 2008 figures are still estimates, but as oil and gas prices have risen sharply since the beginning of the year when these figures were budgeted, it's nigh on certain that every cent will be handed over on schedule.

The first thing to note is that the gas-rich state of Tarija gets by far the most money from the IDH payments. It's then followed by Santa Cruz. This is because the gas is produced in these regions, and not a question of population density. For example, Tarija department has around 4.4% of Bolivia's approx 9.1m total population but gets 32.9% of the 2008 IDH budget. And to put that into context, at the current exchange rate of Bs7.2 = U$1, that adds up to U$798 per capita in Tarija, which compares to the state pension of U$333 per annum (yeah, you worked it out again; doesn't seem much to you, but that's serious buying power in Bolivia).

Secondly, note how every single department is receiving significantly more IDH money than in 2005 (pre-Evo). In fact if we look more closely at the four "half moon" states.........

..........we see that in the period 2005 to 2008, Tarija's revenues have increased by 104.4%, Santa Cruz's revenues by a whopping 190.9%, Beni's by 128.9% and Pando's by 139.3%. This kinda makes the half moon authorities look stupid about complaining, doesn't it? Or perhaps miserly? Or perhaps we should just get it over with and call them the manipulating lying pieces of shit that they really are.

So when supposedly neutral organizations such as the
International Crisis Group call upon Evo Morales to suspend the state pension payments because it isn't fair on the departments who are looking to break away from the national government, it kind of makes those dudes look stupid too, doesn't it? To quote the influential ICG in its latest report:

"The government should provisionally stop taking IDH money away from the departments to finance its new pension fund (Renta Dignidad)...."

Or maybe...just maybe...these supposedly neutral third party observers have their own agenda to fill as well. Whatever, but the facts blow the suppositions out the water when it comes to Bolivian finances. And once again I'm left thinking, "Wow, a real live anti-imperialist revolutionary Socialist with a capital "S" who is being careful and smart with a nation's finances." It's certainly a refreshing change, no matter what your politics are.

Republished from inca kola news


Anonymous said...

Yes, fiscal discipline is great, but it's not everything. Pre-revolutionary Cuba's best financial year was 1958, just before Batista's downfall. In the 1970s, Central America's economy was booming...on paper, whilst the majority languished.
My point is that great fiscal balances need to translate into tangible benefits (e.g. improvement of salaries) and not merely State handouts. To be sure, nobody can blame Evo for the global price hikes that are impacting upon ordinary Bolivians, but maybe a bit more attention to urban workers' buying power would go a long way to stabilizing the MAS project. If Bolivia's economy is as strong as you say, there is no excuse for leaving wages as they are.

Anonymous said...

Interesting point on the level of the wages being paid: by who? the industrialists who pocket the profit, the outside investors in mines and industry?

I suggest that the state should stay away from setting the level of salaries.

Bolivia Rising