Economy. The 2012 State s General Budget (PGE) Ministry of Economy and Public Finances Monthly Issue. Year 1/Nº2/December 2011

Transcription

1 PLURAL Economy The 2012 State s General Budget (PGE) Ministry of Economy Public Finances Monthly Issue Year 1/Nº2/December 2011

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3 La Paz, December 2012 Plural - Economy 1 To our lectors The second edition of Plural Economy Magazine breaks down 2012 State s General Budget developed by Ministry of Economy Public Finances within New Economic, Social, Communitarian Productive Model s frame. The budget reflects impact of State s intervention in Bolivian Economy, a role that can be said has been central, because six years ago, public sector assumed responsibility to boost economic growth, directing investments creating fiscal enterprises, without putting aside economic surplus redistribution policy, through social bonuses, a measure that contributed to reduce extreme poverty to 26.1% (2009) from 37.7% in 2006 The PGE backs up continuity in economic growth, macroeconomic stability, encourages an unprecedented public investment in social, productive areas, aiming to strengn New Economic, Social, Communitarian Productive Model. The Financial Law also aims to carry on boosting economy growth, that according to 2012 budget will rise to 5.52%, keeping macroeconomic stability, with an inflation rate of 5%, like in last six years, in middle of an international financial crisis that in case of Europe United States, is still having negative effects. The economic growth in 2012 will be boosted again with a public investment injection that shows positive results achieved by nationalization policy. The USD3.252millions include a 25% increment in relation to 2011 PGE, five times more than in 2005 (USD629million) Always within frame to consolidate New Model, in 2012 PGE, social productive investment ( hydrocarbons, farming, education, housing, etc) are seven times higher than in 2005, it means that next year USD1852million will be invested, meanwhile six years ago it just reached USD266 million. These investments are possible thanks to policy to raise fiscal revenue that in last six years has more than double, to around Bs30.000millions in It is special to remember that before 2006, state was dismantled- lacking of productive infrastructure resources to redistribute to people. The economic surplus coming from natural resources exploitation was going abroad. As we pointed out in first edition of this magazine, Bolivia is going through a transition period towards a socialist productive model. In this period, we have to acknowledge, that country still depends on extraction of raw materials. Our goal is to invest manufacture sector s profits to accomplish objective of producing goods with added value. Social Communication Unit

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5 3 Plural Economy The 2012 Budget forecast an Economic growth of 5, 52% The 2012 State s General Budget, developed by Ministry of Economy Public Finances, forecast an economic growth of 5.52%, a Nominal GDP of USD25.963millions, an inflation rate of 5% a public investment of USD3.252milliond, among ors. The Financial Law forecast a GDP of USD millions for next year. As every year,, from 2006, GDP sets a global fiscal deficit of 4.5% 4.8% for Nation s General Treasure, in relation to GDP, however in last six Years Bolivian Economy has registered a fiscal surplus at end of each fiscal year. The Financial Law set a budget of Bs million (USD million) a consolidate of Bs million (USD21.244million), 14% 22% higher, than approved budget for 2011, around four times more than 2005 budget (Bs millions). Macroeconomic Variables (p) Description Ppto. Ejec. Ppto Ejec. Ppto Ejec. Ppto Ejec. Ppto Ejec. Ppto Ejec. Ppto. GDPGrowthRate (%) 4,10 4,80 5,00 4,56 5,70 6,15 5,75 3,36 4,51 4,13 5,04 5,20 5,52 Average Exchange type 8,12 7,96 7,98 7,80 7,60 7,19 6,97 6,97 7,00 7,07 6,97 6,86 var. (±10) Inflation Rate (End of year) 3,38 4,95 3,74 11,73 5,50 11,85 9,50 0,26 4,50 7,18 4,00 6,00 5,00 Nominal GDP (millions of Boliviano) Nominal GDP (millions of USD) SPNF Fiscal Results (%GDP) -3,7% Fiscal Results TGN (% GDP) -3,0% ,5% -3,4% 1,7% -4,1% 3,2% -1,8% 0,1% -4,9% 1,7% -4,2% 1,0% -4,5% 0,3% -1,1% 1,5% -2,3% 1,2% -3,6% -0,6% -6,0% 0,03% -4,8% -0,5% -4,8% A recordusd3.252 million of public investment in Bolivia

6 4 Ministry of Economy Public Finances The Nominal GDP grew two a half times Luis Arce Catacora, Ministry of Economy Public Finances, explained that GDP growth rate of 5.20% is higher than one forecasted by some international organizations is backed up by injection of USD3.252millions as public investment, historic number in Bolivia. The Nominal GDP (addition of goods services produced in one year) will reach to USD25.963millions. Amount that shows TGN REVENUE STRUCTURE y average (p) (In percentage) Patents Royalties Revenues Or Revenues 6% Capital Revenue 5% 11% A 15.20% GDP growth rate is higher than one forecasted by international organizations is backed up by USD3.252 million public investments Customs Revenue 5% ITF 2% IDH 5% Domestic Revenue 57% IEHD 11% Patents Royalties Revenue ITF 2% 5% Or Income 6% Capital Income 0% Customs Revenue 6% IDH 6% IEHD 6% The 2012 PGE forecasts an inflation rate of 5% Domestic Revenue 69%

7 Plural Economy Bolivia is a mature economy, a grown up economy. In 2006, Nominal GDP raised to USD10.472millions, index that for 2012 will rise to USD millions. It means that in six years Nominal GDP grew 130%, So it is 2.3% bigger than in The 2012 PGE has an expansive productive character, that takes into consideration international economic crisis, Tax Revenue represents 26% of PGE income Tax Revenue went up in 7%, in relation to And doubled in relation to 2005, from Bs millions to Bs millions, programmed for This numbers do not take into consideration Direct Hydrocarbon s Tax (IDH). The Income Tax revenue, represent 19.5% of Consolidated State s General Budget (PGE). The Tax Revenue is one of most important sources of funds that would aloud General Treasury to fulfill its state obligations, as well as transferences made to Councils, (Tax participation IEHD) Universities (Tax participation). Tax Revenue (p) (Expressed in Millions of Bolivians) Tax Revenue has Doubled Bolivia now directs more resources to productive sector investment

8 6 Ministry of Economy Public Finances But does not limit social benefits of population, as payment of bonuses such as, Dignity Rent Juana Azurduy. Besides it has objective to encourage productive investment at state enterprises such as YPFB, Huanuni, Vinto, COMIBOL Ende among ors. Productive social costs Social Sector costs (including health education), went up in 14% of GDP in 2005 to 19.9% in 2011 In frame of 2012 State s General Budget (PGE), costs are mainly directed to productive sector with Bs million Bs millions for social expenditure. The productive costs went from 5.3% of GDP in 2005 to 39.7% in 2011, it is estimated that for 2012 will represent 38.4% of GDP. According to PGE. Bs57.798millions are directed to hydrocarbons energy areas, Bs4.663millions go for mining metallurgy; Bs5.504millions are distributed among productive development plural economy. Economic development will have Bs2.133millions, Rural Development L will receive Bs1019millions. In same way, expenses directed to social sector went from representing 14% of GDP in 2005, to 19.9% in 2011, for 2012 is planned to be around 18.6%. From se costs Bs millions are for education, Bs.8331millions for public works housing Bs5723million will go to Health Sports, Bs3214million for defense, Bs 2.309million for government, Bs million for environment water Bs 830 millions for justice. Social Sector Costs Budget Execution (P) (Million Bolivianos GDP Percentage) The budget has an expansive productive character

9 PluralEconomy The 2012 budget allocates USD755 million for subsidy in import of diesel, petrol liquefied petroleum gas. This amount was calculated taking into consideration volatile fluctuation in price of barrel of oil at international markets 7 Wages salary costs reach 11% of GDP USD755 millions for fuel subsidy Wages salary costs represent 11% of total budget; it means Bs million, from which Bs.6.102million belong to Education Local Service. Bs.1.281millions are for health local services. The Armed Forces will get Bs.1.343millions Bs.1.125millions for Police. The State s General Budget (PGE) has forecasted hydrocarbons subsidy of USD755millions, higher than amount estimated for this year, from which USD465millions will go to subside diesel imports, USD75millions for GLP imports, meanwhile petrol subsidy is USD205 millions. It is also planned payment of salaries to council management for Bs.1.587millions. Local management will spend Bs.600million. Public Enterprises will get Bs.1.564millions; Decentralized Entities Bs. 773millions, Public Universities Bs. 1694millions, Central Management Bs.1.925millions, Social Security Institutions Bs.1.303millioins Financial Institutions Bs.90millions. The hydrocarbons subsidy is defined considering international context changing behavior on oil prices. The PGE forecast a reduction of Hydrocarbon s Direct Tax (IDH) revenue, since it is expected a reduction in oil prices at international markets. Hydrocarbons Subsidy (Million USD) (e) 2012(e) From 2006 National Wage went up 66%

10 8 Ministry of Economy Public Finances The National Minimum Wage has doubled in last six years Entre , Bolivia ocupaba el último lugar en cuanto a incremento salarial. Pero en el sexenio ya se ubica en el cuarto lugar Between , accumulated wages for education health sectors reached 53%, a bigger increment than between (22%). Besides National Minimum Wage has doubled from Bs.440 (USD 55) in 2005 to Bs (USD119) in Last six years went up in 25%. The National Minimum Wage has raised 66% between , in nominal terms percentage is higher than 22.5% given by neoliberal government between This meaningful increment was given to protect purchasing value of worker s salary. Between Bolivia was in last place regarding wage rise.on or h between is already in fourth place. The following example also helps to underst how government does not just apply a salary reposition policy, but purchase power too. In Education sector, salary went up from 30% to53%. Salario Mínimo Nacional: (En Bolivianos) Or numbers According to data from Fiscal Studies Analysis Unit from Ministry of Economy, between (last neoliberal government period in Bolivia) average rise in Nominal Salaries (it means, Money that each worker receives) was 30%. Meanwhile between (Evo Morales Government), Nominal Salary rose 66%. 815, In this point is also interesting anor comparison. The Real Salary (amount with purchasing value) rose 12% between Meanwhile in El 11% del Presupuesto es para el pago de sueldos y salarios 2011

11 PluralEconomy 9 Neoliberals develop budgets based on Recipes from foreign organizations In neoliberal period ( ) state companies were privatized, fiscal cost were not made transparent even re were reserved expenses extra allowances to high government authorities During Neoliberal Period (1985 to 2005) government developed Nation s General Budget (PGN) base on recipes given by international organizations, costs were not made transparent, had constant deficits, among many or differences. President Evo Morale s administration ended this way of developing a budget applied economic measures with an active state engagement, recovering natural resources, with economic surplus re distribution among unprotected sectors, or measures directed to help state become a planner, investor, regulator, benefactor, developer banker. The PGN was according with a neoliberal model was discretionary regulator state manager, which main objective was to reduce state engagement in local economy, in favor of transnational businesses operating in country In neoliberal PGN, expenses were not made transparent. a clear example of this was existence of reserved expenses, economic resources assigned to Government Ministry without any supervision, or extra allowances payed to ministers, vice ministers state authorities, with money coming from abroad. From 2006, re is no more reserved expenses or extra allowances, se resources have been directed for creation of health education jobs ( see page 12 footnote in this edition). Investment in Productive Infrastructure The average annual public investment in neoliberal period did not go over. On or hs this six years of President Evo Morales government, public investment has gone up, its expected will go up to USD3.252 for The most important State s Companies such as Bolivian State s Oil Field (YPFB), Power National Company (ENDE), Vinto s Smelter, that were not generating profits, or producing neir goods nor services. And ors such as Telecommunication s National Company (ENTEL) that were hed out to private hs through a process called capitalization (word used by neoliberals to cover up transfer of state companies to private hs) Luckily, Evo Morales government nationalized hydrocarbons on May 1 st 2006 recovered ENTEL (2007) or state companies, boosted YPFB, aiming to take charge of hydrocarbon s production chain. Gran parte del gasto se va a las empresas estatales

12 10 Ministry of Economy Public Finances Besides, state enterprises were created, such as CartonBol, PapelBol, Bolivian Aviation (BoA) almonds state company, so that new jobs were created, to provide to state with productive infrastructure. Inclusion Deficit At neoliberal era, resources from councils, universities Social Security Institutions, were not part of general budget. But from 2010, current government added se resources to States General Budget (PGE), in order to improve control over resources. Neoliberal governments had a constant deficit, that were funded with loans from international organizations (such as International Monetary Fund World s Bank), that in Exchange would impose ir own economic recipies. Thanks to a responsible management of public funds, in last six years, we did not use foreign loans to pay salaries or Christmas bonuses to public servants (including teachers health workers) as previous neoliberal governments did, that before end of year sent government missions to Washington or New York to fund fiscal deficit loans. In neoliberal period economic surplus was not distributed. On or h was left on hs of transnational companies that export such profits instead of invest m in companies y were exploiting or in local endeavors. Today surplus remains is distributed in country. Who is responsible to develop budget? Every year, State s General Treasury (PGE), is developed by Ministry of Economy Public Finances that writes down a la w p r o j e ct t h a t i s s e n t t o t h e P l u r i n a t io n a l L e g i s l a t i v e A s s e mb l y ( AL P ) f o r i t s co n s i d er a ti o n a n d p a s s i n g. Until 2009, PGE was called Nation s General Budget. But since application of New Politic State s Constitution (February 2009) new name was adopted. Since law project for 2011 PGE, for first time were added budgets for 337 councils of Bolivia. Public entities included in PGE are Body Executives, Local Governments, Councils, Universities, Decentralized entities Banks Social Security, Public Companies, Legislative Body, Judicial Body Electoral Body. These entities are responsible to develop ir institutional budgets, which ones are added consolidated at State s General Budget (PGE) by Ministry of Economy Public Finances presented by President of Plurinational State to Legislative Plurinational Assembly for its approval within State s Political Constitution frame. This means that councils took responsibilities to send ir Annual Operative Plans ir 2011 Budget to Ministry of Economy Finances, in compliance with CPE Autonomies Law. El Gobierno de Evo Morales eliminó los Gastos Reservados

13 PluralEconomy 11 The biggest slice in costs goes for fuel wholesales The budget for costs, goods services in 2012, increased in relation to 2005, from Bs450millions (5.9% of 2012 GDP)mainly due to wholesale operations 8fuel wholesale marketing in domestic market) YPFB production, as well as Plurinational State s public companies operations. The new states engagement in economy has encouraged from 2006, a bigger participation from productive companies in state, so that operational const justify this increment. The operational costs justify this increment. The operational costs for wholesale production at YPFB, from 2006, within nationalization framework, goes up to Bs millions (13.4% from GDP). The 2012 Budget also considers goods services costs from territorial entities that goes up to Bs.5.215millions (Bs.4.198millions for councils Bs.1.017millions for local governments). Goods Services usual costs (In millions of Boliviano percentage of GDP) Goods Services YPFB (Production wholesale) Council Management Desentralized Entities Public Companies Central Management Local Management Total Var. % 2012 / % 26% 47% 26% 5% 8% 10% % Var. % GDP 2012 / ,4% 2750,0% 2,4% 788,5% 2,2% 217,5% 2,0% 1692,8% 1,4% 55,5% 0,6% 313,0% 22,0% 756,6% Defense government costs are not higher than health Education It is also planned to have Bs. 3929millions for decentralized entities, Bs2.412 millions for central management of Plurinational State, Bs 3.544millions for operational costs of or public companies such as COMIBOL, HUANUNI, VINTO, BOA, ENDE EBA. Within this frame it justify that a rise in goods services costs are mainly due to operations made by YPFB public

14 12 Ministry of Economy Public Finances There will be USD4.799 millions For social costs As a consequence of austerity policies proper fiscal income management, Evo Morales government has taken into consideration at 2012 State s General Budget (PGE), a social cost of USD4.799millions, amount that represents 19% of Gross Domestic Product (GDP). The Ministry of Economy Public Finances, Luis Arce Catacora, announced that since Evo Morales took office, government was specially careful when managing public finances, manage to ore than double fiscal revenue from tax customs, an austerity policy was also implemented a rise in Net International Reserves (RIN)was achieved. This is context that allowed government during 2005 to increase social costs to 14% Items Education { Items Salud { 2011 of GDP to keep a possible 19% for The main costs are for Education with Bs11.332millions meanwhile health sports get Bs.5723millions, this numbers are higher than ones for give to Armed Forces (FF.AA) that will get Bs.3.214millions or Government (National Police) with Bs.2.309millions. It is clear that in our budget costs in our for Education Health are most important from social cost point of view. Therefore, it is unfounded to say that government, at least from 2006 would be spending, more results for Armed Forces or at Government Ministry, said Minister. More jobs The Government s encouragement for Education Health is also reflected in creation of more jobs from (2005) to (2011); it means that government hs created in last six years new jobs for teachers. Meanwhile in health sector number of jobs went up from (2005) to (2011), meaning new doctors nurses employed for public service in health with fiscal resources. El PGE 2012 prevé recursos para las empresas del Estado

15 PluralEconomy 13 Public sector investment Will reach USD1.076 millions For 2012, programmed productive sector investment goes up from USD1.076 million (33% of whole public investment programmed) to USD3.252,5 millions) hydrocarbons projects st out with USD648 millions, farming sector will get USD204 millions; tourism industry will get USD114 millions mining USD110 millions. The infrastructure investment reaches USD1.216 million (37% from total investment). For building of roads There is a budget of USD949 million; electric energy investment will get USD118 millions; communications receives USD83 millions hydro resources will get USD67 millions. Meanwhile programmed investment for social sector goes up to USD776 from which USD295 millions are fore housing urban design; USD226 millions for education culture USD172 millions for sanitation USD84 millions for projects on health social safety. Public Investment : (p) (En Millones de USD) +25% 3.252,5 5 Veces más que ,4 { Average USD 1.239,2 MM 1.351, , ,4 { Average USD 590,2 MM 1.439,4 879,5 638, , , , , (v) 2012 (p) Las altas recaudaciones fiscales permiten elevar los ingresos regionales

16 14 Ministry of Economy Public Finances Regions Resources will rise 3% for 2012 Nine local governments, 337 councils 11 public universities in Bolivia will receive resource transfers for Bs millions, it means, 3% rise in General State s Budget ( 2012 PGE) in relation with Local Governments will have Bs4.874 millions, Councils will receive Bs8.013 millions universities will get Bs2.182 millions. The increase in resources is mainly due to a 7.8 % rise in tax revenue 7,8% in relation to The tax revenue has double in relation to 2005, from Bs millions to Bs millions for 2012 Even though regions income w i l l reduce in 1.5% that means a reduction of Bs165 millions, for Hidrocarbons Direct Tax Share. Total income through transferences, added to resources for hydrocarbons sharing, tax revenue sharing, mean more than 3 5 increase. The resources transferences from hydrocarbons sales, tax revenues, revenue for mining forestry are made automatically to fiscal accounts from Transferencias a las Entidades Territoriales y Universidades: (p) (En Millones de Bolivianos) 3% , , , , , , , , , , , , , La inversión en infraestructura será de USD1,2 millones 2011 (v) 2012 (p)

17 PluralEconomy Local governments, councils, universities through Bolivian Central Bank, (BCB) National Tax Service. Some analysts say that income reduction at regions coming from hydrocarbons will affect health educations sectors, statement that does not have foundation because it is proved that in 2012 governments, councils universities will get more resources than this year. As a result of resource transferences from Central State, Local Governments, Councils Public Universities have saved millions boliviano in Bank accounts Regions have more resources Between transference of resources to local governments, councils, Universities, reached Bs millions three times more than than amount received between , when transferences reached Bs millions. In 2011, transfers reached Bs millions. 15 As can be seen, due to results coming from good prices at international markets good economic management if Evo Morales s Government, millionaire transfers of resources were made to regions. As a result of significant transfers made to regions, nowadays local governments bank accounts have more than Bs millions, it means Money available for investment; councils have in ir accounts Bs7.005 millions Universities Bs1.442 millions, making a total of Bs millions, it means USD millions, not executed. A good part of se resources can be used next year in additional investment programs projects up to Bs million (USD2.197 millions). Execution Cost s Budget Productive Sector (p) (In millions of Bolivians GDP percentage) The Dignity Rent benefits to 886,619 persons

18 16 Ministry of Economy Public Finances The 2012 PGE secures bonuses payment At 2012 State s General Budget government secures continuity of social policies such as social bonuses (Juancito Pinto, Dignity Rent Juana Azurduy), as well as retirement income payment. BONO JUANCITO PINTO: (p) (En Millones de Bs y Alumnos beneficiados) Millones de Bolivianos ,12 275,38 364,25 350,24 14,6 14, , ,00 15, , ,4 13, , , ,1 264,4 336,2 349,7 325,0 369, , Costo Costo operativo 2011 (ppto) 2012 (ppto) Alumnos beneficiados (En Millones de Bolivianos y Beneficiarios) ,8 Mujeres y Niños Millones de Bolivianos Bs 369, 6 millions were directed For payment of J u a n c i t o Pinto Bonus, for children at public schools The 2012 PGE forecast a cost of Bs2.307 millions for payment of Dignity Rent With resources transferred from Hydrocarbons Direct Tax (IDH) capitalized companies profitability, now back to state. BONO JUANA AZURDUY DE PADILLA: (p) Alumnos beneficiados The surplus redistribution through bonuses reduce extreme poverty levels from 37,7% (2006) to 26,1% (2009); school dropout rate to 2,9%, half percentage registered in 2005, indicators that are by international organizations such as The Economic Commission for Latin America United Nations. The amount of benefited people in whole country, that received at least once Dignity Rent, to October 2011, reaches Bs elderly. The amount paid for Dignity Rent in country until October 2011, is Bs 256 millions. At same time PGE directed Bs138 millions, for life annuity Remarkable People, for Juana Azurduy Bonus- that reach pregnant women ir children up to two years old- a budget of Bs107.6millions. This last bonus reached to people until September In 2012, public universities will receive more resources

19 The Dignity Rent benefits to 886,619 persons

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21 La Renta Dignidad beneficia a 886,619 personas