Wednesday , December 8 2021

Juan Antonio Morales: If reserves fall further, the money will have to be depreciated


Stoned Tancara Castillo / La Paz

Read economics texts and prepare an exhibition. Therefore, I found him a former president of the Central Bank of Bolivia (BCB), Juan Antonio Morales, at his office at the Catholic University of Boliviana, where he learned for 40 years and led the publishing body at 11 years.

He expresses his concern as the International Reserves (RIN) do not give the best to fall in the last year, as they have reduced 1,532 million dollars until September 28 , 2018 with a similar ratio to the previous year's month.

Please, if it continues at this pace, that the BCB will have no other option than to eliminate national currency, continuously 6.96 Bolivianos dollar since 2 November 2011. The BCB informed on 8 November 2018 that Bolivia was Approximately 8,600 million dollars of international reserves. In 2014, the reserves reached their highest level, 15,123 million dollars.

What does it mean that the BCB gives the best to sell dollars in the window?

Central Bank has not given the best to sell dollars in windows giving the best to sell to the financial system, which must be underlined; he has given the best to sell to the public and it seems right; in fact when I was a president (the BCB) the sales to the public through the window had to stop; the basic idea is that it should always be so, (the BCB) as a wholesale operator, a bank of banks, and does not perform transactions in detail.

So, the BCB went back to its usual practice?

They will have to go back to what they had in front of them and that people find that the price increases or reduced, when they want to sell a dollar, the only thing they should do is go to the first banking agency that is on their way, a small cost that suddenly has to queue up, which takes a little longer; Economists call the cost of a shoe floor, which means a negligible cost. So, if the free traders require more dollars, they have to go to a bank bank from a bank.

Those who do not sell in the window will have any consequences for the economy?

I do not think that he has any result, which I see as an administrative measure only; Now the fact, one may criticize the opportunity, they should have done (at another time) because at the moment it is apparent that there is a specific nerve in relation to the exchange rate and in relation to the swap operations, then that's not the moment; Now, when we came to our small window (in the BCB) it seems to me an incorrect decision, I say that the Central Bank is a bank of banks, it's basically working with banks, so opening (the window) is a popular movement; In essence, street lovers are basically reaching the public, who prefer to do so in a banking agency; Now there is nervousness with the exchange rate, I do not believe sincere (it has results).

What was the most unfortunate in this Government?

One of the most misleading decisions taken in this Government was freezing the exchange rate, the system with the Supreme Decree 21060, which had its shortcomings, but it was inventive and allowed two things: first , allow the competitiveness of our money against the money of trading partners; and, secondly, very important, dismantling the expectations of the devaluation, people had become familiar with the fact that the exchange rate sometimes moved a penny sometimes, two, the three cents highest per week, often moving, but the public already had become familiar.

This was a great achievement, which is now leaving the exchange rate, which is in progress since November 2011, is committed to using the BCB exchange rate, because the smallest organization with the people's exchange rate will be scared, thinking where this land will be, not see other movements. That is quite problematic to handle. On the other hand, what has been frozen (the change in the dollar), we continue with competitive problems, that is, we lose competitiveness for our non-traditional exports and, on the other hand , we have flooded products from abroad to our internal market. We are national production and national employment; On the other hand, falling country expectations form, and then (freezing in the dollar change) has been quite unfortunate since November 2011.

International reserves are falling, what do you think it deserves?

Yes, and they have come down hard, it's part of the problem, the last guarantee of the exchange rate maintenance is the international reserves; if the reserves are falling too low, no other will be after the Central Bank has to eradicate national currency. That is, increasing the dollar price, if it goes too much, but then it's for this reason that people make a great sequence for international reserves, a vehicle that obsesses with level of international reserves; At present the reserves are still in a good level, which concerns are how fast they are falling, of almost 15,000 million dollars we received in 2014 this has dropped To 8,500 million total gold reserves, because it is a little gold, it's very little liquid, it does not like to have a currency, it does not have a dollar, it's the reserves Backup has decreased even more, something like 6.600 million.

With the double bonus, the country loses competitiveness?

That is also if it remains stable and at the same time it follows financial policies of large financial expansion and at the same time a very dynamic pay policy, double bonuses, increases higher than inflation, we are losing international competitiveness and that makes us lose, the lack of trade is increasing, the balance of payments; Current accounts measure transactions with the exterior, not just goods but also services; If one is going to address the balance payments reserves, the international reserves will have to be replaced by those shortcomings.

The deficit this year will be the same as the previous year?

The deficit will continue to be high, last year, the deficit came to almost 8%, the shortfall was also in the current account of slightly lower nail defects, it reached six and a half, but there are two things that could alleviate the situation of this deficit; One thing that could have alleviated was the increase in oil prices affecting the natural gas price, which is the main export, but we are experiencing difficulties in exporting natural gas, sales to Argentina have dropped substantially; and, the other, what can be earned, because international prices are higher in terms of tax revenues, will be lost with double bonus, because this payment is very expensive. Then the financial deficit may increase (in relation to the previous year, but) that will not be reduced (it will be slightly reduced The current account, the balance of payments that go (increases) if the price increases in oil, if the price of exports increases, it could also improve the balance of payments. In fact, the balance of trade of exports and Imports are still negative, but it has reduced very strongly to last year, so we will get a trade deficit. What does trade deficit mean? The difference between exports and imports is negative, there are more imports than exports, but it is much less negative than last year. On that side, we should see a very important reduction in the financial part , what we could have improved has worsened with the double bonus.

Do you think there is a bad calculation for paying the second Christmas bonus?

I have great confidence in the National Statistics Institute (INE) technical competence, I believe that it has good experienced technicians, I do not have much doubt about their technical competence, but they have a great political pressure, the fact that it is have made a second tone of growth The political growth rate has been politically & decisions; then that's that one for politics and the growth rate calculated would not be good in principle. The technicians are subject to very political pressure.

Will this political pressure have to relate to the error that is actually in GDP growth?

There was a repetitive effect, at the beginning of last year, climatic factors, the production had dropped considerably due to the weather, it has a reasonable effect; In what I am convinced is that there has been a lot of political pressure.


  • Forming He has a Ph.D. in Economics, Masters Degree and Bachelors Degree in Economics from the Liverpool Catholic University, Belgium.
  • Work experience Former President of Bolivia Central Bank and current undergraduate and graduate professor at the Boliviana Catholic University School of San Pablo.

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