Full Breakdown
Bolivia Secures $1.9 bn IMF Loan and Ends Diesel Subsidies
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Core Event
Lawmakers will vote on a $1.9 billion (? €1.65 bn) IMF loan on September 18, with Senate ratification the next day. The 36-month Extended Fund Facility also unlocks over $5 bn from the World Bank, the Inter-American Development Bank and other partners. After the vote, President Rodrigo Paz announced the end of diesel subsidies for trucks, buses and tractors, while gasoline subsidies for private cars remain temporarily. He also disclosed a cash-assistance package of about $79 million (? €68.8 m) for roughly 2.9 million Bolivians and preferential loans for truckers, small businesses and producers facing higher diesel costs.
Background & Context
Bolivia’s economy has been strained by high inflation, weak growth and dwindling foreign-exchange reserves. Falling natural-gas exports reduced dollar inflows that financed fuel imports, creating gasoline and diesel shortages since 2023. Subsidies kept fuel prices below regional levels but drained public finances and spurred a black market. Road blockades in June and July, led by trade unions demanding President Paz’s resignation, prompted a 90-day state of emergency with limited civil liberties.
Data & Statistics
- IMF loan: $1.9 bn (? €1.65 bn).
- Cash assistance: $79 m (? €68.8 m) for 2.9 million people.
- Economy Minister Christian Morales reported net international reserves of $3.17 bn, with $52 m liquid, and projected reserves of nearly $6 bn by end-2026, $8 bn by 2028 and $9.07 bn by 2031.
- Fiscal-deficit targets: 9.1 % of GDP in 2026, 6.4 % in 2027 and 3.8 % in 2028.
- IMF programme calls for elimination of fuel subsidies, tighter monetary discipline, a flexible exchange-rate regime and productivity reforms.
Official Statements & Responses
Minister Morales defended the loan, saying it will restore lender confidence and help raise reserves while cutting the fiscal deficit.
Criticism & Opposition
The Bolivian Workers’ Central, the main union federation, denounced the IMF deal, arguing that cutting fuel subsidies will raise living costs for vulnerable families and risk renewed protests. Union leaders warned that eliminating diesel subsidies could worsen shortages that have already disrupted harvests and delayed imported goods.
Conflicting Reports & Gaps
Sources differ on when diesel subsidies will be fully ended. President Paz announced an immediate termination, while other reports suggest a complete phase-out by January next year. The IMF’s executive-board approval is still pending, and the loan cannot be disbursed until that decision is made.
What’s Next
The IMF executive board must approve the staff-level agreement before any funds are released. If approved, the first tranche will support reserve rebuilding and fiscal-deficit reduction. The government projects reserve growth to nearly $6 bn by end-2026 and a fiscal-deficit decline to 6.4 % of GDP in 2027, with further reductions planned for 2028. Monitoring fuel-price impacts and potential social unrest will shape subsequent policy adjustments.