Bolivia Secures $1.9 Billion IMF Loan and Ends Diesel Subsidies Amid Growing Unrest

In a hurried session on Friday, Bolivia’s Congress gave the green light to a $1.9 billion loan package from the International Monetary Fund. The approval was a major win for President Rodrigo Paz’s market‑friendly administration, which has been scrambling to stave off a deepening economic crisis.

Almost as soon as the vote was tallied, Paz announced the abrupt termination of diesel subsidies that had kept trucks, buses and farm tractors artificially cheap. He said the fuel would now be sold at world prices – a shift aimed at satisfying IMF conditions and, hopefully, easing pressure on the nation’s dwindling foreign‑exchange reserves.

Gasoline subsidies for private cars remain in place for the moment, although they have already been trimmed in recent months. The president also pledged about $79 million in cash assistance for roughly 2.9 million Bolivians and promised preferential loans for truckers and small businesses hit by higher diesel costs.

The Senate ratified the deal just a day after the lower house approved it, clearing the final legislative hurdle for a three‑year program designed to stabilize a battered economy plagued by soaring inflation and sluggish growth. The IMF’s staff‑level agreement, first announced in July, still needs sign‑off by the fund’s executive board before any money is released.

Economy Minister Christian Morales told senators that the IMF infusion should encourage other lenders – the World Bank, the Inter‑American Development Bank and private investors – to commit roughly $5 billion in additional financing. In other words, the loan is meant to act like a catalyst, restoring confidence in Bolivia’s fiscal management.

Yet the bargain comes with a steep price. Removing fuel subsidies has already ignited anger among labor unions and workers’ groups, who warn that higher living costs will deepen hardship for families already stretched thin. The Bolivian Workers’ Central and other unions have staged road blockades in June and July, demanding Paz’s resignation.

In response to the protests, the government extended a state of emergency for another 90 days, giving security forces broader powers to clear roads and suspend certain civil liberties. Critics argue the measure threatens democratic norms, but officials say it’s necessary to keep the supply chain moving.

Politically, Paz’s Christian Democratic Party does not hold a majority in either chamber. Still, centrist and right‑leaning legislators rallied around the IMF deal, while the once‑dominant Movement Toward Socialism (MAS) now occupies a tiny fraction of seats – two in the lower house and none in the Senate.

Beyond politics, Bolivia’s declining natural‑gas exports have stripped the country of hard currency needed to import gasoline and diesel, exacerbating chronic fuel shortages that began in 2023. The ongoing conflict in Ukraine and sanctions on Iran have pushed global fuel prices higher, making subsidies an even heavier burden on the state budget.

“No one can buy something expensive and sell it cheap,” Paz declared in his late‑night address, underscoring the government’s resolve to let market forces set diesel prices. He promised the move would end the chronic diesel shortages that have hampered harvests and delayed deliveries of imported goods, assuring citizens of “24‑hour, seven‑day” fuel availability.

While the IMF deal remains subject to final approval, many Bolivians now watch anxiously to see whether the promised cash aid and loan facilities can soften the blow of higher fuel costs, or whether the country will descend into another round of street protests.