Cablegate: 2007 Development Plan to Be Released December 31

VZCZCXYZ0007
PP RUEHWEB

DE RUEHLP #3402/01 3531308
ZNR UUUUU ZZH
P 191308Z DEC 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 1683
INFO RUEHAC/AMEMBASSY ASUNCION 6406
RUEHBO/AMEMBASSY BOGOTA 3730
RUEHBR/AMEMBASSY BRASILIA 7600
RUEHBU/AMEMBASSY BUENOS AIRES 4850
RUEHCV/AMEMBASSY CARACAS 2102
RUEHPE/AMEMBASSY LIMA 2175
RUEHME/AMEMBASSY MEXICO 1992
RUEHMN/AMEMBASSY MONTEVIDEO 4297
RUEHQT/AMEMBASSY QUITO 4739
RUEHSG/AMEMBASSY SANTIAGO 9324
RUEHSO/AMCONSUL SAO PAULO 2110
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHBS/USEU BRUSSELS
RHEHNSC/NSC WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS LA PAZ 003402

SIPDIS

SIPDIS

STATE FOR WHA/AND
TREASURY FOR SGOOCH
ENERGY FOR CDAY AND SLADISLAW

E.O. 12958: N/A
TAGS: ECON EAID EFIN EINV EAGR BL
SUBJECT: 2007 DEVELOPMENT PLAN TO BE RELEASED DECEMBER 31

REF: LA PAZ 1660

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Summary
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1. (U) President Morales will announce the government's
economic development plan for 2007 on December 31. The
government will encourage production through the founding of
a national development bank, perhaps with Venezuelan funding,
and by government purchase of products and the creation of
"productive complexes." The government will promote human
capital development by increasing free public health
coverage, targeting resources for poor municipalities, and
opening boarding schools for rural children. End summary.

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2007 Development Plan to be Released December 31
--------------------------------------------- ---

2. (U) President Morales will announce the government's
economic development plan for 2007 -- based on its five-year
national development plan (reftel) -- on December 31,
according to press reports. The government will encourage
production through the founding of a national development
bank and by government purchase of products and will promote
human capital development through education and health
initiatives.

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Production Stimulation
----------------------

3. (U) The national development bank will provide low-rate
credits based on collective guaranties to micro, small, and
medium enterprises affiliated with social organizations and
syndicates. Press reports indicate that the bank currently
has USD 30 million that were transferred to it by the
existing state-owned Bolivian National Financier. The press
speculates that the Bolivian state-owned Union Bank could
become the development bank by channeling USD 100 million in
concessional loans granted by Venezuela. The bank would
finance the production of such products as soy, quinua,
honey, coca toothpaste, milk, furniture, leather, and
textiles. In addition to creating the bank, the government
plans to encourage production by purchasing Bolivian products
for government use or for reselling abroad. The government
will promote job creation and improved production through
creating "productive complexes," which will provide farmers
and others with access to technology, markets, and roads.

--------------------------
Investing in Human Capital
--------------------------

4. (U) The government also plans to promote health and
education in 2007 by increasing free public health coverage
from age 5 to age 21, providing resources for health and
education to 148 of the country's poorest municipalities,
opening boarding schools for rural children who live far away
from education centers, and providing public transportation
for school children.

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Comment
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5. (U) The government's design for the national development
bank remains unclear. Depending on how the bank is set up,
it could negatively impact the rest of the banking sector.
The government's proposal to purchase goods lacking markets

to stimulate production sounds like a costly, unsustainable
method of job creation, and the "productive complex" idea
seems poorly defined. However, the GOB's planned health and
education initiatives could produce long-term gains by
strengthening Bolivia's human capital. End comment.
GOLDBERG

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