After winning a presidential election that, for the first time in almost two decades, did not include a candidate from the Movement for Socialism (MAS) among the favorites, the new center-right Bolivian president Rodrigo Paz began an agenda of profound reforms to dismantle structures left by left-wing governments and rebuild the national economy.
Weeks after taking office, Paz eliminated taxes, announced unprecedented administrative cuts, exposed irregularities that he said drained billions of dollars from the state and began a complete reorientation of Bolivia’s foreign policy.
The first measures focused on the economy. Still in November, the new government removed four taxes – the Tax on Great Fortunes, the Tax on Financial Transactions, the Tax on Gaming and the Tax on Business Promotions – under the argument that these taxes, created by the socialist governments of the MAS, drove away investments and accelerated capital flight from Bolivia. The new government’s economic plan also foresees a 30% reduction in public spending by 2026, with a full review of the budget being discussed in Parliament.
The administrative reform promoted by peace began with the Ministry of Justice, which ceased to exist. The new president accused the socialist governments of Evo Morales and Luis Arce of having transformed the office into an instrument of persecution against opponents in Bolivia.
“There will be no more political persecution in Bolivia. The Ministry of Justice is dead and we are going to bury it well so that it does not persecute Bolivians again”, said Paz.
The fight against corruption became another central axis of the new government’s first decisions. In a press conference at the beginning of his term, Paz stated that initial audits found “a sewer with more than 15 billion dollars in corruption” involving contracts, purchases and administrative structures set up over 20 years of socialist governments. Among the cases cited are French-made radars valued at 360 million euros which, according to the new president, have not worked for more than a decade. The new government is also currently investigating irregularities committed within the Ministry of Hydrocarbons, the state-owned YPFB and the National Hydrocarbons Agency (ANH), identified as responsible for part of the fuel shortage in the country.
Upon taking office, the Paz government said it had encountered the “worst economic crisis in four decades” in Bolivia, with international reserves at critical levels, difficulties in purchasing fuel and distortions caused by an artificial exchange rate. To overcome the situation, the economic team is negotiating more than US$9 billion in external financing, in addition to an emergency loan of US$550 million from the Development Bank of Latin America and the Caribbean.
In the institutional field, Paz defended a “reconstruction from scratch” of Bolivia’s judicial system, stating that the country had experienced years of “politicized justice”. In a speech during an event last month, the president said that he found “a State trapped by bureaucracy” and stated that the independence of Bolivian Justice will be a condition for regaining public trust. The government also announced the digitization of all judicial processes to avoid loss of files and manipulation of cases.
Rapprochement with the USA
Bolivia’s foreign policy is also undergoing realignment under this government. The country’s new chancellor, Fernando Aramayo, announced in November that Bolivia will no longer maintain political alliances with Cuba, Venezuela and Nicaragua and will pursue diplomacy that is “pragmatic, professional and based on democratic values”. The country has already established full diplomatic relations with the United States, which had been severed since 2008, started talks about the return of the DEA (US drug agency) to Bolivia, eliminated the visa requirement for American citizens and launched an “open skies” policy to facilitate air connections.
The ongoing changes mark the biggest Bolivian political shift since 2006, when the MAS came to power through Morales. With spending cuts, institutional restructuring and rapprochement with the West, the center-right government is trying to reverse almost two decades of the statist model and reposition Bolivia on the international stage.
