With Morales Out, Whats Next For Bolivia?

Bolivia's next president faces economic challenges.

Bolivia faces significant challenges in the wake of its violent regime change after Evo Morales was forced to resign. Notably, the country must tame a ballooning deficit, boost flagging economic growth and build a more inclusive economy in the racially segregated nation.

“The balance sheet doesn’t look good,” says Capital Economics’ Edward Glossop. The South American country’s budget deficit has soared to 8%, eclipsing recession-stricken Argentina’s 4% and a whisker above Brazil’s 7%. The nation’s debt has risen to 58% of GDP. And this year, economic growth—which topped 7% during Morales’ 14-year tenure—could slow to 3.5%, down from 4.2% in 2018.

To lift the economy, Bolivia must quickly move to tighten fiscal policy, especially as weak natural gas prices cripple export revenues, says Glossop. A new administration such as promised by Morales’ main rival, Carlos Mesa, may fuel prosperity and boost FDI, which totaled $300 million last year.

“It could be good to get a more centrist government that undertakes reforms,” muses Glossop. “The economy has been inwardly focused for a while.” Developing new revenue streams and building a more inclusive economy over time are also seen as pivotal.

“One of the problems with Morales is that we used our hydrocarbon reserves, which are fading fast,” says Armando Alvarez, a financial consultant and former president of Bolivia’s stock exchange. Agriculture, notably soy and cattle exports to China, and tourism have strong development potential, he adds.

Bolivia’s future president will also need to do more to tackle soaring inequality between the vast indigenous population and the white elite—a rift that stoked violent protests before and after Morales’ departure in October. The socialist Morales, Bolivia’s first indigenous president, is credited with halving poverty and boosting growth to twice the Latin American average. The new election is to take place by Christmas.