I think it's safe to consider the book as both real-life Drama and light fantasy, as both aspects are present throughout the book and interfere with each other on certain events, or more exactly, the book being Magic Realism.
The thing about it being real-life drama is that though strongly implied, I remember that they never mentioned that the story is in Colombia, so it could be another republic based on it, though with events that mirror those that also happened in Colombia (the banana plantation massacre for example, sadly did happened in real-life around the early 20th century).
In general, the book is a mindscrew in many respects, so your interpretation on events is as good as mine.