Bolivia is confronting two extreme opposites of climate change, floods and drought, prompting officials to commit almost US$27 million to deal with water access problems and road upkeep for the crucial agricultural sector.
According to an expert, the primary threat to the economy is not the effects of climate change, but the country’s structural flaws.
According to the public works ministry, the government has set aside 62.5 million bolivianos (US$9 million) for road repairs and to ensure that the country’s main highway network (RVF) can be used throughout the rainy season of 2022-23 (December through March).
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Meanwhile, 122mn bolivianos (US$18mn) has been assigned to a national drought response plan, with 150 municipalities already having been assisted so far this month.
Some 200,000 hectares of farmland has been impacted by the lack of water, with 20,000 hectares being declared lost, state news agency ABI reported quoting deputy rural development minister Álvaro Mollinedo.
Agriculture accounts for around 13% of Bolivia’s GDP, according to World Bank statistics, while exports from the sector reached a record US$2.2bn in 2021, figures from the country’s foreign trade institute show (IBCE).
Economist Gonzalo Chávez, head of the masters for development program at Universidad Católica Boliviana, the country’s economic model, which is heavily dependent on exports such as agricultural goods, is undergoing a slow death that began as far back as 2014.
While the government boasts of low inflation and unemployment figures, the economy is suffering from structural deficiencies such as high levels of informality and slowing private investment, which is reflected in a high public deficit and low international reserves.
“The government suffers from macroeconomic narcissism. It looks at the economy and sees indicators such as inflation and growth, and only those figures,” he said during a live TV broadcast.
This story was adapted from Bnamerica.
