The recently inaugurated Rodrigo Paz has wasted no time in embarking on his project to neoliberalize the Andean country. According to the president, Paz proposes cutting public spending by almost 30% in 2026, equivalent to 4 points of GDP.

In addition, he has proposed eliminating a series of taxes, especially for the wealthiest. One of these is a special tax on large fortunes, which Paz has promised to eliminate. The special tax is levied on those with fortunes of more than USD 4 million (less than 1% of the population) in a country where the basic salary is less than USD 400.

The Confederation of Private Entrepreneurs has quickly and publicly welcomed the decision, which is complemented by a series of measures to make foreign investment “more attractive”. The elimination of taxes on gambling businesses has also been announced.

“[These taxes] drove away more than USD 2 billion that went to neighboring countries such as Paraguay. These are the obstacles that did not generate any benefit for the country,” Paz told the press.

Through these measures, the executive branch promises to reduce inflation and the foreign currency shortage that have plagued the country in recent years, although several critics have claimed that the measures will mainly lead to greater social inequality, less public investment for the neediest social sectors, and the handing over of Bolivia’s natural resources to private companies at very low prices.

Paz has not been entirely clear about his proposal, as he has not indicated which state sectors will be most affected by the elimination of almost a third of public spending (a record for the Andean country), which, according to the president, represents “insipid spending”.

Economy Minister Gabriel Espinoza said, “We have asked the Chamber of Deputies to return the 2026 budget law to us so that we can amend it, aggressively reducing current spending that does not reach the people. It has nothing to do with basic services or infrastructure, but with eliminating the ‘fat’ from the state.”

Investigation into corruption or political persecution?

But neoliberal reform does not only contemplate economic restructuring, but also a political counterattack against those who governed the country for more than 20 years, namely the Movement Toward Socialism (MAS). Using the same strategy employed in countries governed by social democratic governments, such as Ecuador, Brazil, and Argentina, neoliberal reforms aim to judicialize various political and economic activities carried out by past governments.

Paz has announced the creation of at least ten “Truth Commissions”, which, he says, will be responsible for uncovering acts of corruption in public institutions during previous administrations.

Few public companies have been left out of this sort of “new neoliberal inquisition.” State-owned oil, road, telecommunications, lithium, and other companies will be investigated for alleged irregularities. Even before the investigations begin, Paz has already claimed that the alleged damage to the state amounts to nearly USD 15 billion.

“We must show the people the mess they left us in so that they are fully aware that the guilty parties will pay … Everything that has been justified as a subsidy is tainted with corruption. We will fight to ensure that the price is fair, but I do not intend to support corrupt individuals and thieves who have turned subsidies into a business,” Paz told the press.

Several analysts have said that this marks the beginning of a season of “political persecution,” although Paz has said that this is not the case, but rather “an investigation into the theft from Bolivian families. This is economic damage to the state, and all cases will be investigated, without exception, including individuals and entities that have contributed to this situation.” Among those accused is Rafael Arce, son of former president Luis Arce, who, according to the government, has illegally enriched himself by more than USD 3.3 million.

Fracture in Paz’s government

In this way, Paz hopes to bury the MAS project economically and politically, accusing it of two intertwined historical crimes: inefficiency and corruption. Whether the accusations prove to be true remains to be seen. And even more so if they withstand the severe scrutiny of history, in which neoliberal governments have typically aimed to bury the progressive option because, in their view, it is inefficient and corrupt.

However, Paz will have to face an opposition that, despite losing the presidency, has not lost its significant capacity for mobilization and historical resistance to neoliberal measures. Furthermore, within his government, Paz has already experienced a recent rift with his vice president, Edman Lara, who called the president a “liar” and claimed that he is poorly advised in creating the “Truth Commissions”.

“Time will prove me right, my conscience is clear. I am working for my country, and I will prove it. And in the end, they will realize that Rodrigo Paz is nothing but a liar … He says that his priorities are to solve the people’s problems, but let me tell you, Rodrigo Paz, that you are lying. You have not solved any of the people’s problems so far,” Lara said.

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