Andean Group - November 2006 (ISSN 1741-4466)

The economy should benefit from the new oil contracts with the foreign energy companies. The government claims that the new contracts, which take the tax and royalty rate on foreign energy companies' operations in Bolivia up from 50% to 82% of profits, will virtually double the government's oil revenues by 2010. In the first eight months of this year the government's tax income jumped by 46% to US$1.71bn, following the increase in tax revenues pushed through by the previous government. The previous government's increase took the rate up from as little as 18% to 50%.

Foreign investment: The main business lobby, Concainco, which is based in Santa Cruz, is modifying its criticism of the government's economic policy. In the first half of the year it had played up the negative flow of foreign investment in 2005. Now, after the inflow has turned positive again, Concainco argues that at around US$250m, the inflow is far too little to do much to reduce poverty levels in the country. On official figures 58% of Bolivians live in poverty.