Bolivia's Evo Morales_March 2011

Then came embarrassment when rené sanabria a retired

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Then came embarrassment when René Sanabria, a retired police general who is the government’s top drug adviser, was arrested in Panama on February 24th and extradited to the United States on charges of cocaine trafficking. Some officials said that the arrest was revenge by America’s Drug Enforcement Administration for its expulsion from Bolivia in 2008. However, the interior ministry had three other police officers arrested. Both coca and cocaine production have risen in Bolivia in recent years, according to the United Nations. But the main headache for Mr Morales is the economy. The government’s abortive attempt to remove the fuel subsidy (which cost $380m last year) was a sign of its more straitened finances. Its spending continues to grow, but the short-term boost to its coffers from the tax increase on oil and gas seems to have run out. The state oil company lacks the means, and multinationals the will, to invest much in expanding natural-gas output. Luis Arce, the finance minister, says that the government last year posted a fiscal surplus for the fifth year running, but others doubt that. According to Jaime Pérez of Fundación Jubileo, a think-tank, the government went into the red in 2009. The government itself forecasts a fiscal deficit of around $870m (4.2% of GDP) this year, high by regional standards. Another sign of trouble is inflation, which has surged to 8.4% over the 12 months to January.
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Then came embarrassment when René Sanabria a retired...

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