The government of Bolivia should spend much more money to save the economy and control COVID-19

Published in Los Tiempos, 1 July 2020.

Countries are in the dilemma: save lives with restrictions (quarantine) or rescue the economy with fewer restrictions. The restrictions that paralyze part of the economy cost money, but each life that is saved is also an economic gain.

The Bolivian government launched a plan to save the economy. First, it seems to me that it is extremely late and the bonuses they have paid so far are truly little. With the quarantine the economy has been paralyzed with the emergency brake. Many companies have run into financial problems because they have no income and many of the costs continue (wages, rents, etc.). If they do not receive help in time it means that they will cease to exist. If jobs and companies disappear, it is goodbye to productivity. Reactivating it is extremely complicated and takes time.

I believe that one of the reasons that the quarantine is not working is due to the lack of financial compensation to companies and individuals. Companies have stopped paying wages because many can no longer due to lack of income. Sole proprietorships have no other option to continue working and the risk of contagion increases. The irony is that, thanks to the lack of financial aid from the government, the epidemic will last longer, cost more lives and more money.

If Bolivia wants to beat COVID-19, everyone must pay. If this means that Bolivia must increase its external debt to pay and maintain income, jobs, and control COVID-19, then it must be so. The strategy must be differentiated by income levels; you cannot compensate everyone equally. Equity criteria must be followed. And companies that want to be compensated can show in their accounts that they have losses, and for informal companies, the banking system knows very well how their income is. The government should use this database as the basis for faster and financial aid and keep companies alive when all this is over. I imagine that afterwards with a COVID-19 tax for a time all these loans would be recovered.

Obviously, if we want to implement it quickly, the key is to give a margin of confidence to people and companies and trust that the information provided for compensation is true. At the same time, Bolivia must include a post-control in the law. This means big fines, jail time for fraud and return of the compensation if it is later shown that individuals or companies have taken advantage of the aid or taken advantage because of laziness without creativity. So also, sanction (without public subsidies for a year, for example) to people who receive a subsidy for staying home and do not fulfill it.