Paz Takes Bolivia Oath, Promises Economic Reforms

Victor Paz Estenssoro took office as president of Bolivia on Tuesday and announced bold economic reforms to save this indebted country from what he called “the risk of bankruptcy.”

Paz, 77, an elected president, succeeded an elected president, Hernan Siles Zuazo, marking the first time in 25 years that Bolivia has experienced an orderly transfer of power. During that time, there have been seven military coups.

While the democratic presidents of Argentina, Colombia and Uruguay looked on, Paz said in an inaugural address that he will defend democracy and human rights and “protect the poorest.”

But he said the “national disaster” of Bolivia’s economic distress calls for work discipline, a fight against corruption and economic policy changes opposed by leftist groups here.

Paz announced that he will free Bolivia’s controlled official exchange rate, now one-ninth the black-market rate. Under Siles, unrealistic exchange rates produced a huge contraband economy and contributed to an annual inflation rate of 10,000%, the highest in the world.

Paz said he would renegotiate Bolivia’s $3.3-billion foreign debt with international banks and governments, but he said he would do so “without taking the bread from the mouths of our needy people.”

He also announced that his government would welcome foreign capital for new investments in mining and petroleum projects.

“This country can’t remain permanently paralyzed in poverty out of the fear of allowing foreign investment,” said Paz.

The new exchange policy is aimed at promoting exports, which Bolivia needs desperately to pay for essential imports. Foreign investment in oil fields can boost Bolivia’s waning production of petroleum and natural gas, a major export resource.

Siles wanted this to be done by the state oil company, but the company is virtually bankrupt because Siles maintained price controls on gasoline.

Bolivia’s economy has been kept afloat by its cocaine industry, which earns about $1 billion a year. Paz said Bolivia has an “unavoidable obligation” to cooperate in international drug control programs, but he said he will ask for substantial financial aid, including programs to substitute other crops for coca leaf.