Bolivia planning to invest US$3.5bn in Santa Cruz infrastructure

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Friday, September 23, 2016

Bolivia's government aims to invest US$3.5bn in infrastructure in Santa Cruz department, part of President Evo Morales' drive to make the landlocked Andean country's exports more competitive.

Investments are planned in highways, airport, railways, housing and telecommunications "in coming years," public works minister Milton Claros told reporters in La Paz.

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The ministry calculates local road investment alone at US$1.3bn, including the Saavedra-Chané and El Torno-Comarapa highways and the Mineros bridge, Claros said.

Other transport projects in the region include the US$28mn San Ignacio de Velasco airport and the US$750mn Santa Cruz light railway, currently out to tender, according to Claros.

The government has invested 1.25bn bolivianos (US$175mn) over the past decade in 1,437 infrastructure projects in 56 municipalities in Santa Cruz, mainly potable water, sewerage and schools, according to state news agency ABI. Another 73mn bolivianos are planned for water, schools and roads this year.

Santa Cruz, the largest of Bolivia's nine departments, has a population of 2.7mn people and is home to the country's largest natural gas operations, in addition to the El Mutún iron ore mine and soybean, sugar and cotton farms.

ECONOMY

While Morales has pledged US$48.6bn in infrastructure and energy investments over the next five years, his government will be hard pressed to drum up financing as economic growth slows, according to analyst Alvaro Ríos. Bolivia, which depends on natural gas for half its export revenue, saw hydrocarbon revenue plunge 50.8% to US$1.1bn in the first half.

"The country is starting to feel a tremendous impact from falling exports," Ríos said at an event in Lima. "Bolivia is using US$100mn/month in international reserves to continue countercyclical spending and has already spent US$2.5bn of its reserves."

At least 280 Bolivian industries went out of business during the first seven months of the year because of excessive costs such as labor, according to the national industries chamber CNI. At least one company closed down every day during 2015, CNI vice president Ibo Blazicevic said.

"The number of industry closures is rising and that indicator should be worrying," Blazicevic told La Paz-based newspaper La Razón.

Morales, who lost a referendum to extend his mandate in February after being sworn in for a third consecutive term last year, has seized pension funds, oil fields, mines and electricity, water and telecommunications companies since first taking office in 2006 in a bid to strengthen state control over the economy.

Morales allocated US$6.40bn to public spending in 2016, compared with US$6.18bn last year. The country, which allocated US$2.5bn to infrastructure projects in 2015, has earmarked 30% of this year's budget to infrastructure.