MercoPress. South Atlantic News Agency

The Economist: After 20 years of left-wing rule, Bolivia is about to swing right

Rodrigo Paz, surged from under 10% in polls to take 32% of the vote in the first round. 58, is the son of Jaime Paz Zamora, a former president

By the time Rodrigo Paz arrived at his final campaign event in El Alto, the sprawling city on a plateau that overlooks the Bolivian capital of La Paz, the crowd had spent hours under the hot sun.

 Luckily it came prepared with crates of beer and potato-heavy picnics. “We indigenous peoples are the majority—and we will win again,” roars one well-fortified man, prompting people all around to belt out the Aymara victory cry: “Jallalla!”

For 20 years residents of the Bolivian highlands have voted for the Movement to Socialism (MAS). Not anymore. In August they backed Mr Paz, a centrist senator, in the first round of the presidential election. He will face Jorge Quiroga, a conservative former president, in a run-off on October 19th. Meanwhile, the MAS received so few votes it almost lost its legal status. That means Bolivia is sure to swing right and liberalize its economy. What is not yet clear is just how much Bolivia will change, or how the economic mess the MAS leaves behind can be fixed.

In early 2023 the central bank all but ran out of dollars. Bolivians can no longer freely access saved American currency. On the black market dollars sell at almost twice the official exchange rate. The government flogs gold to pay for fuel imports, but shortages are still constant. Inflation has soared, hitting 18% for the year to September. After 11 consecutive years of deficits, public debt now amounts to 92% of GDP.

As the economy burned, current president Luis Arce and former president Evo Morales, a charismatic leftist who led Bolivia from 2006 to 2019, wrestled to lead the MAS into this election. When polls showed that just 2% of voters intended to vote for Mr Arce, he withdrew his candidacy. And when a court ruling stopped Mr Morales from running, he called for voters to spoil their ballots. About 20% of them did.

But many more backed Mr Paz, who surged from under 10% in polls to take 32% of the vote in the first round. Mr Paz, 58, is the son of Jaime Paz Zamora, a former president, and has been in politics for decades. But his running partner, Edman Lara, is a straight-talking outsider who became a popular hero after being fired from the police for denouncing corruption in viral TikTok videos. Together they crisscrossed the country promising new politics—neither those of MAS nor its established opposition—and “capitalism for all”, which would protect MAS social programs while liberalizing the economy and cracking down on corruption. It worked, especially in the highlands, where they took almost 50% of the vote.

Mr Quiroga, 65, represents that established opposition. A former vice-president, he briefly held the presidency in 2001 after his boss stood down. This is his fourth try at getting elected. Mr Quiroga describes the reign of the MAS as “20 lost years” and promises radical change. His support is strongest in the agri-business hub of Santa Cruz, Bolivia’s most populous and economically dynamic department, which has long opposed the MAS.

Ahead of the run-off, polls have Mr Quiroga leading Mr Paz by between four and eight points. Given that pollsters missed the support for Mr. Paz in the first round, many are skeptical. “Here in El Alto, it’s widely believed that the surveys are manipulated to favor Quiroga,” says Pablo Mamani, an Aymara sociologist.

Whoever wins will have to dig Bolivia out of an economic crisis. First on the agenda is to source dollars and keep the fuel imports flowing, or their government might be short-lived. Mr. Quiroga has said he will go straight to the IMF to ask for a loan. Mr Paz claims a loan won’t be needed after his government cuts corruption and restores confidence, prompting people to pull dollars out of mattresses. Nonetheless, both have already made a trip to Washington to start discussions.

With or without the IMF, Bolivia will need big changes, particularly to its fuel subsidy, which cost US$ 2 billion in 2024, or almost 4% of GDP. Much more will be needed to bring the fiscal deficit down from over 10% of GDP. Bloated ministries and loss-making state companies will be on the block. Boosting agri-business exports may pull in much-needed dollars. Reforms could entice foreign investors into mining, oil and gas. But an independent judicial system will need to be rebuilt after years of abuse by the MAS. At some point, the fixed exchange rate will have to be loosened.

What will Bolivians tolerate? In 2010, when Mr. Morales tried to remove the fuel subsidy, protests forced him to backtrack. Now people grasp the need for change. But the next president faces a dilemma: move too slowly and you squander political capital while the economy degrades; move too fast and Bolivia spirals into recession. To each other’s voters, Mr. Paz and Mr. Quiroga embody these risks. “That’s the debate,” says Daniel Agramont, an economist. “Gradual, or shock?”