Supreme Decree 21060

Measures implemented

• The linking of the Bolivian economy to the US Dollar. The Bolivian peso devaluated with 93 percent over one night, in fact installing the US Dollar as currency and denying the country to commit an own monetary policy. Accounts in any currency were authorized and interest rates were freed.
• A drastic pushing back of the government shortage. This actually meant adapting tariffs and prices to the "reality", resulting in a price explosion of goods and services. The government ended all subsidies to the public sector.
• Two thirds of the employees of the tin and oil companies managed by the government and scaling back the salaries of the remaining third part and public sector salaries were frozen till December 1985.
• The liberalization of the market. This include the end of protection of certain destitute sectors by the government. The Bolivian Development Corporation, one of the largest state enterprises, and the National Transportation Authority were dissolved, passing their property on to regional development corporations. These in turn had the task of privatization of enterprises. Restrictions on foreign commerce were abolished with the elimination of prohibitions and quotas. Above that a single duty of 20 percent was fixed for all importations. This resulted in the local production of goods and services coming under enormous press and also mainly succumbed.
• In order not to place the Bolivian economy under unnecessary pressure the payment of the foreign debt was stopped for some years. This agreement between Bolivia and the IMF was done under the strict condition that the complete economic reforms, as drawn by Jeffrey Sachs would be implemented without condition.

  Impact on the economy