Q: Resource-rich countries have been hit by the downturn in the commodity markets. How is Bolivia coping?
A: First of all, we are coping with the commodity downturn through strong public investment. The engine of growth in Bolivia is the state. Our business community has always lacked the liquidity to invest, and we are now investing our own resources. The private sector is following these investments, supporting them because, of course, there is money to be made as public works contractors. The other engine of growth is internal demand. Rather then betting on external demand, we are betting on stimulating domestic demand through social policies, redistribution policies. We are increasing internal demand, and at the same time fixing social problems. Our new Economic Social Communitarian and Productive Model works when commodity prices are high, but also when they are low.
Q: What have been its achievements so far?
A: In the 10 years of Evo Morales’s presidency, we have been the fastest-growing country in South America in 2009, 2014 and 2015. We expect to keep growing at 5% in 2016 [from 4.1% in 2015], which will make us the fastest-growing country in the region for the third year in a row. From a social perspective, Bolivia is not the poorest country in South America any more, as UN figures showed, as we raised some 2 million people from poverty.
Q: What is your agenda between now and 2020, when the current legislature comes to an end?
A: We have a very demanding national plan through 2020. We will invest $48bn between 2014 and 2020. Our main focus is the industrialisation of strategic sectors such as oil and gas, iron ore and lithium mining and the agriculture sector, alongside the development of key infrastructure like roads and an airport hub for the whole continent [in La Paz]. At the same time, we would like to be a bigger energy player in the region by exporting electricity to our neighbours. Why would they buy our gas to produce electricity when we ourselves can export electricity where we have more value added, and where we can also use hydroelectric plants?
Q: What will be the role of the private sector and private investment in this new development?
A: The private sector has an important role. We need technology, partners for the development of our strategic sectors [where private investors can co-invest with state companies that still have to retain at least 51% of any resulting joint venture]. There are other sectors such as tourism and manufacturing that are free to private investment. Today Bolivia has economic, social and political stability, and investors cannot find these opportunities together in other South American countries these days.
Q: The government has pushed through nationalisations of its hydrocarbons and other strategic sectors since coming to power in 2006. Are private investors still facing nationalisation risks in Bolivia?
A: Our nationalisation agenda is over. We did everything we had to do. We had a mandate to recover all the state investment that originally belonged to the Bolivian people, but was sold out during the 20 years of neo-liberalism that preceded us. We re-nationalised those assets so that we can transfer their surpluses to the country’s new economy and to social programmes. But now we are building a new country, we need FDI, and we respect genuine, new private investment. Today FDI makes up 2% to 3% of GDP. We want to double it by 2020.
Q: GDP growth is resilient, but commodity exports revenues are inevitably falling, as has FDI in the past couple of years. On the other hand, the government is strengthening ties with new partners like China. Are they filling the void left by the challenges stemming from the current global cycle?
A: Countries like China or Russia were the first ones to see opportunities in Evo Morales’s Bolivia. Chinese credit lines have now emerged as the cheapest option to finance our public investment plans. They are not without strings however as with them comes the involvement of Chinese companies. What we are doing is using these new credits from China, and also India, to replace existing, more expensive credit to finance our $48bn investment plan, which is 70% covered by internal resources, and 30% covered with external financing. At the same time, we are thinking of issuing a $1bn, 10-year eurobond in the second half of the year.
Q: A recent constitutional referendum denied President Morales the chance to run in 2019 for a new, fourth term. Is he still trying to seek re-election?
A: We had a referendum, it was very close, and we are going to respect the result. But if people still think that Evo can go for another term, it’s constitutional and legal to call another referundum [to decide the possibility of another possible term]. We are not thinking of it at the moment, but many social movements are calling for it and we will be looking at what they want.
Minister of economy and finance
Central Bank of Bolivia