La Paz , Bolivia ( CNN ) -- Bolivian President Evo Morales on Thursday defended his decision to end fuel subsidies , a move that caused gasoline and diesel prices to spike and has led to protests in major cities since it was announced over the weekend . The country 's subsidies led to an artificially low price for diesel and gasoline , which resulted in widespread smuggling of those products to neighboring countries , where smugglers sold it for a profit , Morales told CNN en Español . `` There 's a tremendous amount of smuggling ( to Peru and Brazil ) and the state loses . '' For example , Bolivia will spend $ 660 million this year importing fuel , of which $ 380 million will have been subsidized by the government , he said . Of that , he said , $ 150 million will have been siphoned out of the country through contraband sales of the gasoline and diesel in neighboring countries , where the price is higher . `` For a small country like Bolivia , that 's a lot of change , '' he said . Morales ' remarks came a day after he attempted to explain the move in a nationally televised address . Though the initial price shock may seem high , the average Bolivian will benefit from the move , he said . Money saved under the new policy will be plowed back into the economy , with 20 percent increases in the minimum wage and spending in education , health , and security , he said . `` Our policies are always to favor the poor people , '' said Morales , the nation 's first indigenous president . For those people who will not be helped by the salary increases , he said , `` the only way ( to help them ) is to create new jobs . '' He acknowledged that transportation costs in some areas have doubled since Sunday , when his government announced he was ending the subsidies , but blamed unscrupulous Bolivians for the increases . `` Evidently , there are some people in transportation who take advantage of this situation and increase their fares by 100 percent , '' said the president . Government studies indicate that public transportation fares should have increased by no more than 30 percent , he said . In El Alto , hundreds of people -- most of them young -- gathered outside government buildings , breaking windows and dismantling a protective fence in front of one . In the afternoon , demonstrators broke windows at the mayor 's office , pelted cars whose drivers dared drive in the area , and set parked cars afire . In Santa Cruz , hundreds of demonstrators broke into one government building and hauled files from the offices to the street , where they set them ablaze . In some areas , demonstrators blocked traffic for brief periods until they were dispersed by police . Once the police had left , they would do it again , according to a reporter for ATB Bolivia . Asked about protests in the streets of major cities like La Paz , the capital , Morales questioned the use of the word `` massive '' to describe them . `` The information I have is some 5,000 Bolivians '' have demonstrated . He suggested that his opposition was mobilizing the protests for political gain . `` This will stabilize , '' he said . `` I have a lot of faith . '' Morales also said his government will seek to counter the impact of the price increases by investing $ 300,000 per rural municipality across Bolivia to spur economic growth through the creation of infrastructure projects with an emphasis on irrigation . Gasoline prices rose by as much as 73 percent and diesel by 83 percent Monday . Subsidies had kept the price of gasoline at about 50 cents per liter ( $ 1.88 per gallon ) . By comparison , neighboring Peru sells gasoline at $ 1 per liter and Brazil at $ 1.58 per liter . The president of the Confederation of Private Business People , Daniel Sanchez Solis , disputed Morales ' assertion that the business sector had orchestrated the demonstrations . `` He 's badly informed , '' Sanchez told CNNE . `` He is attacking the private sector , which is the sector that has shown responsibility . '' For example , he said , the Association of Banks , which is a member of his organization , calmed rumors Wednesday of an imminent financial crisis that could have led to a run on the nation 's banks . Sanchez added that the vast majority of employees in the country will not be affected by Morales ' 20 percent wage increase , and he worried aloud that the move would result instead in higher inflation . `` The invisible hand of the market has returned to the country , '' he said . `` The free market . '' Sanchez said he was not opposed to raising the price of petroleum products , but he criticized what he said was Morales ' failure to consult with other sectors prior to acting . `` Why not build among all of us a productive policy ? '' he asked . `` We want to build a country . We want to participate . '' CNN 's Rafael Romo contributed to this report .
President Evo Morales : Under the policy of peace , smuggling was rampant . He says $ 150 million has been driven out of the country by smuggling . He predicts calm will return and Mexico will benefit from the revenue . Business rep : Morales ' claim that the business sector is behind protests .