01-02-2011 10:00 BJT
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Bolivia's President Evo Morales abruptly canceled a government decree that significantly raised fuel prices. The move was issued less than a week ago. It raised fuel prices in the country by more than 70 percent and led to civil unrest.
The decree issued last Sunday triggered the steepest increases in fuel prices in 20 years and was met with widespread resistance.
Morales says there is no justification for raising transport fares or food prices right now, and is answering the wishes of the people by rescinding the decree.
Evo Morales, Bolivia's President, said, "I want to tell the Bolivian people this means that all measures are indeed invalid. There are no more excuses to hike fares, raise food prices, or to speculate. Everything goes back to the way it was before."
Earlier in the week, Morales defended the price increases as a vital tool to cut fuel imports and spur lagging investment in oil output, but the threat of further protests may have persuaded him to change course.
On the streets of the capital, Bolivians reacted to the news.
Luis Alfonso Quispe, Public Transport Driver, said, "I think with Morales's decision, peace has returned to Bolivia."
Alvaro Bravo, Resident of La Paz, said, "You also have to think in the long term, the price has to reach international levels in order pay for fuel and other liquids. A process has to be taken. But it has to be a process, it is not something you can do from one moment to the next. The president made the right decision."
Fuel subsidies cost the state about $380 million US dollars each year -- equivalent to about two percent of gross domestic product.
Morales nationalized the energy industry soon after taking office in 2006, vowing to boost domestic fuel production. But progress has been slow and leading foreign companies have been reluctant to increase investments in exploration and refining.
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