Bolivia approves $1.9 billion IMF deal, eliminates diesel subsidies
[September 19, 2026] By
CARLOS VALDEZ and ISABEL DEBRE
LA PAZ, Bolivia (AP) — Bolivian lawmakers approved a $1.9 billion loan
agreement with the International Monetary Fund on Friday, delivering the
conservative government a key victory in its efforts to ease the
country's deep economic crisis as unions threatened renewed protests.
Just hours after Congress approved the loan, President Rodrigo Paz
announced an immediate end to subsidies for the diesel powering
Bolivia’s trucks, buses and tractors — a step toward meeting IMF
demands. Gasoline, used mainly in private cars, would remain subsidized
for now, though Paz had already scaled back that support in recent
months.
The Senate ratified the IMF agreement a day after the lower house
approved it, clearing the final legislative hurdle for the three-year
financing program aimed at replenishing dwindling foreign reserves and
stabilizing the ailing economy marked by high inflation and weak growth.
The IMF first announced the staff-level agreement in July after months
of negotiations with Paz’s market-friendly government, which took power
last year after nearly two decades of socialist rule as part of a wave
of new Latin American leaders allied with the Trump administration.
The program still requires approval from the IMF’s executive board
before funds can be disbursed. Economy Minister Christian Morales told
senators that the deal would give other lenders, including the World
Bank and the Inter-American Development Bank, greater confidence in the
government and help it secure about $5 billion in additional financing.
But the assistance is conditioned on tough economic measures, including
the elimination of fuel subsidies, that threaten to reignite unrest in
Bolivia, where weeks of road blockades in June and July paralyzed much
of the South American nation as demonstrators demanded Paz’s
resignation. Congress on Thursday extended for another 90 days a state
of emergency that Paz had declared to clear roads during the protests.
It allows for military intervention and the suspension of some civil
liberties.
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 The Bolivian Workers’ Central, the
country’s main labor federation, and other unions have voiced fierce
opposition to the IMF loan, warning that the government spending
cuts required under the deal would drive up living costs and deepen
hardship for struggling families.
Although Paz’s Christian Democratic Party lacks a
majority in Congress, the centrist and right-wing lawmakers that
dominate both chambers rallied behind the deal. The Movement Toward
Socialism, the party that dominated Bolivian politics after the
former coca growers’ union leader Evo Morales won the presidency in
2005, now holds just two of the 130 seats in the lower house and
none in the 36-member Senate.
Declining natural gas exports have deprived Bolivia of dollars
needed to import gasoline and diesel, contributing to chronic fuel
shortages that began in 2023 and have persisted under Paz. The Iran
war has pushed up global fuel costs, making fuel subsidies an even
greater burden on public finances.
“No one can buy something expensive and sell it cheap,” Paz said in
his late-night declaration that diesel in Bolivia would now be sold
at international prices.
To cushion the blow, he announced about $79 million in cash
assistance for 2.9 million Bolivians, along with loans on
preferential terms for truckers, small businesses and producers
facing higher diesel costs. He pledged to redirect subsidy spending
toward schools, hospitals and roads.
He promised the change would end the country’s persistent diesel
shortages, which have disrupted harvests and delayed deliveries of
imported goods. “With this measure, we guarantee supplies 24 hours a
day, seven days a week,” he said.
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DeBre reported from Buenos Aires, Argentina.
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