During his presidential mandate, Paz Zamora strongly defended the coca leaf with the slogan "coca no es cocaina". His reconciling attitude towards the coca farmers and the possible relations of his government with the narco-trafficants caused him problems with Bolivian justice. For this reason, the USA sanctioned Paz Zamora depriving him of visa permit for a duration of five years.
On April 21,1993, the supreme court of justice of Bolivia condemned the fugitive ex-dictator García Meza to 30 years of prison.
President Gonzalo Sanchez de Lozada (known as Goni) of the MNR was elected on August 6, 1993. He engaged the country in the way of liberal economy with a political programme called "plan de todos" (plan for all). The principal topic of this plan was capitalization, opening the market of the large public companies (in the transport, telecommunication, energy and food sectors) to foreign private investors. The money of privatizations was intended to be redistributed among the Bolivians (the popular participation) in the form of pensions and retirements (setting-up of Bonosol in 1996) and of educational reform. These liberal reforms were globally not well understood nor accepted by the most people, and they caused movement of protests led by the trade unions of workers (COB). In April 1995, there was 90 days of state of siege, 1000 people were arrested during violent demonstrations. Among them, many leaders of the COB, peasants (including Evo Morales the leader of the coca producers) and students. New general strikes paralyzed the country in March and September 1996, but Goni did not modify his politics.
In 1995, Brazil extradited García Meza towards Bolivia.
On December 17, 1996, Bolivia signed an economic agreement of partnership with the neighboring countries which belonged to Mercosur.
The global outcome of Goni's presidency was not as good as expected. Inflation fell and was stabilized around 6%, and Bolivia gained the confidence from foreign countries, in particular from the USA. However the liberal reforms of Sanchez de Lozada liquidated the last goods that the Bolivian state had (particularly the oil companies which represented a large source of of income for the state), a great part of the money received from privatizations disappeared with corruption, and the country ended divided with the protests of workers and coca farmers.
After 30 years of political life, Hugo Banzer Suarez finally managed to access the presidency of Bolivia in a democratic way (!) His 4 years at the head of the government were not very glorious: the growth of the economy slowed down due to the budget restrictions imposed by his campaign against poverty and also by the Asian economic crisis in 1999. The social climate was agitated, the country was paralyzed by general strikes, and the corruption continued to ruin the institutions.
1998, Entry into force of a programme for eradication of coca, supported by the USA.
In 1998, a magnitude 6.8 earthquake destroyed the village of Aiquile (Cochabamba region) killing 73 people.
In 1999, the international community asked for the judgment of general Pinochet in Chile. The Bolivian opposition utilized this event to ask for an investigation about the violations of humans right perpetrated by Hugo Banzer (friend of Pinochet) in seventies.