November 01, 2007

Redistribution of the IDH Funds

MABB © ®

Graph from La Razon

On October 24, 2007 the Bolivian government issued Decree No. 29322 to redistribute, once again, the intake from the Direct Taxes to Hydrocarbons (Impuesto Directo a los Hidrocarburos, IDH). This tax is levied from the production, mainly, of natural gas exports. Before this latest Decree, the tax was distributed to the municipalities, universities and the departmental governments or Prefectures, with the latter receiving the larger amount of funds. After the new decree, the municipalities are the ones receiving the larger financing from the Central Government.

As a matter of clarification, the municipal governments have the task to further local development and the Prefectures worry about regional development.

This latest policy action by the Morales government has sparked protests on the part of the Prefectures, as was to be expected. At the moment the Prefectures of Santa Cruz, Beni, Pando and Tarija, as well as Sucre (with different motives), are preparing a fight to change the decree and revert the redistribution. Santa Cruz has decided it will fight with strikes, marches and town hall meetings. Beni, to date the most radical, has called its citizens to defend their share even with arms. La Paz, a stronghold for MAS supporters (though the Prefect is not masista), has announced cuts in public works in infrastructure and agriculture development.

The result will be another period of instability and power struggle between the regions and the central government.

In addition, the issue of the moving of the seat of government is not resolved. The Political Council, in charge of forging these agreements in order for the CA to continue, has threatened to move the sessions to Oruro. As a result, Sucre has tamed its stance and has shown some flexibility by trying to show that the sessions could continue with relative normality. However, Sucre has not abandoned its claim to be once again the seat of government.

On thing to point out is how an alliance, between the regions fighting to keep their share of the IDH and Sucre, is forming. In these days, the leader of the Santa Cruz movement, Marinkovic, has gone to Sucre to meet with the leaders there.

For the moment, there is no light at the end of the tunnel. No party is willing to give up its claim to arrive to a middle ground.