Bolivia targets state contracts, lifts controls in push to liberalize economy

By Brendan O'Boyle

LA PAZ, April 6 (Reuters) - Bolivia's government rolled out a series of reforms on Monday as part of a broad effort the president said would "put the house in order" by lifting financial controls and cracking down on what it called corrupt state contracting.

President Rodrigo Paz ended nearly two decades of leftist rule when he took office last November on promises to open parts of the economy to private investment and close loss-making state firms in order to reverse a deepening economic crisis.

On Monday, Paz and top ministers said at a press conference the government was annulling 161 decrees they said constituted a system of corrupt direct contracting and allegedly allowed officials to award contracts to friends, relatives, or party members without oversight, worth $96 million and leading to abandoned projects, such as hospitals and schools.

"Direct contracting, in many cases, became equal to direct corruption," Paz said.

NEW MEASURES AIMED AT FINANCIAL SYSTEM

Paz's predecessor, former President Luis Arce, is in pre-trial detention as he is investigated for alleged embezzlement while serving as economy minister under ex-President Evo Morales. Arce has said he is innocent of the accusations, which he says were made for political reasons.

Paz's Economy Minister Jose Gabriel Espinoza said on Monday the government was lifting restrictions on using Bolivian credit and debit cards for purchases abroad and on digital platforms.

Espinoza said lifting the restrictions was a strategic move designed to bring U.S. dollars back into Bolivia's formal banking system by re-integrating Bolivia with the global economy and to make the banking system a more attractive and reliable channel, including for receiving money from abroad.

Bolivia's dwindling foreign currency reserves - eroded by stalled energy production and exports - have triggered acute shortages of fuel and U.S. dollars.

Paz said the government is also enacting two measures previously approved by Congress as part of his economic liberalization push. The first raises the tax credit on fuel purchases from 70% to 100%, benefiting transporters and consumers as oil prices surge worldwide.

The second eliminates the Financial Transactions Tax, removing a barrier that complicated financial dealings, particularly for those saving or transacting in U.S. dollars.

"We are not only putting the house in order, but we are also liberating the economy," Paz said.