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.


Anonymous said...

Did you see article on oil & gas in New York Times Magazine Sunday? Mostly about Hugo but mentions Bolivia at bottom of page 8.

"The perils of petrocracy" by Tina Rosenberg


miguel (mabb) said...

Thanks for the tip John, a mega article.


Anonymous said...

This graph (above) from La Razon is interesting, but I'd like to note that the Prefectura of Tarija is losing much more in IDH revenue than other prefecturas. It's not clear to me that the department is getting it back through larger payments to the Tarija municipios (and clearly not through higher Plan Dignidad pensions for Tarijans). Some departments might come out nearly the same in net income from IDH, but it looks like Tarija as a whole will lose a lot.

Also, of course, the graph gives us percentages that are supposed to add up to "los recursos del IDH", but I'm guessing that this pool of money will be smaller now, in order to fund pensions. But maybe I'm wrong, since it looks as if the universitarios have been appeased. (Maybe 8.62% = 8.62%.)

Does anyone know?

In any case, I expect municipios in Tarija to be solid with the department on this one. The Chaco people for example.


Anonymous said...

An article in El Pais (Tarija, 6Nov2007) says opposition legislators are calling for renta dignidad pansions to be paid for by departments, not national governments.

"La Brigada Parlamentaria de Tarija, en reunión nacional de brigadas parlamentarias, realizada la semana anterior, en la ciudad de La Paz, planteó que cada departamento pague la renta vitalicia dignidad a sus ancianos con sus porpios recursos provenientes del Impuesto Directo a los Hidrocarburos, existe el respaldo de la mayoría de las brigadas paralamentarias, según informe de Julio Vaca Guzmán, presidente de la brigada de Tarija."


miguel (mabb) said...

The real losers will be the people in Pando. They currently get over 200 (I think Bolivianos) per person.

I am not exactly sure how the exact numbers are distributed. These numbers above come from rough calculations by La Razon. I doubt they have the exact description of the distribution mechanism.

So, it might be that Tarija is indeed getting less (much less). I was looking for another graph I thought I had with the amounts per Prefecture. I cannot find it for the moment.

Also, I doubt the government will go along with the idea of distributing the Dignidad money through Prefectures. It might make sense, but it is a politically loaded question. The government wants to render obsolete these level of government and get a better image for itself by distributing the money.