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Bolivia ends diesel subsidies as Congress approves IMF loan

Bolivia ends diesel subsidies as Congress approves IMF loan

Rule Changes

Senate ratifies $1.9 billion IMF deal; diesel price nearly doubles; transport unions strike over subsidy removal

September 28th, 2026: Transport unions stage nationwide strike; response split

Overview

Updated Oct 6

Bolivia's Senate ratified a $1.9 billion International Monetary Fund loan on September 18. Hours later, President Rodrigo Paz ended the diesel subsidy, and on September 19 the price of a liter nearly doubled to 17.95 bolivianos (about $1.63 at the central bank's reference rate of 11 bolivianos per dollar) under Supreme Decree 5716.

The deal reverses a pillar of nearly two decades of socialist rule. Bolivia's natural gas exports collapsed, draining the dollars needed to import fuel at world prices. Transport unions called a nationwide strike for September 28, though the response was split: some federations struck, while three Santa Cruz groups reached deals with the government.

Why it matters

Bolivia's subsidy removal is a test of whether Latin American governments can cut socialist-era benefits under IMF pressure without triggering regime-threatening protests.

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Key Indicators

17.95 Bs/L
Diesel price per liter after subsidy removal
Set by Supreme Decree 5716 on September 19, up from 9.80 bolivianos. About $1.63 at the central bank's reference rate of 11 bolivianos per dollar. Price now indexed to international import costs.

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People Involved

Rodrigo Paz
Rodrigo Paz
President of Bolivia
Pushing IMF-backed austerity through a divided Congress
CM
Christian Morales
Economy and Public Finance Minister
Defended the IMF deal before Congress
 Evo Morales
Evo Morales
Former president (2006–2019)
Calls the IMF deal a betrayal of the homeland
 Edmand Lara
Edmand Lara
Vice President
At odds with President Paz
 Aquilardo Caricari
Aquilardo Caricari
General Secretary, CSCIOB
Criticizing the diesel subsidy removal
VT
Víctor Tarqui
Union representative, Confederación Sindical de Choferes de Bolivia
Criticizing the diesel subsidy removal

Organizations Involved

International Monetary Fund
International Monetary Fund
International financial institution
Extended Fund Facility program awaiting executive board approval; vote was scheduled for October 2

The lender overseeing Bolivia's $1.9 billion stabilization program.
Bolivian Workers' Central (COB)
Bolivian Workers' Central (COB)
Labor federation
Opposed to the IMF deal; threatening renewed protests

Bolivia's main labor federation, organizing resistance to austerity.
Movement Toward Socialism (MAS)
Movement Toward Socialism (MAS)
Political party
Opposition party, former ruling bloc

The socialist party that governed Bolivia for nearly two decades before Paz.
CS
Confederación Sindical de Choferes de Bolivia
Labor union
Opposed to the diesel subsidy removal

Bolivia's drivers' union, representing transport workers.

Timeline

January 2023 September 2026

11 events Latest: September 28th, 2026 · 1 month ago Showing 8 of 11
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  1. Transport unions stage nationwide strike; response split

    Latest Protest

    Interdepartmental passenger-transport federation confirms a 24-hour work stoppage, warning it could stretch to 48 or 72 hours. Three Santa Cruz federations reach a deal with the government and keep running.

  2. Fuel queues dissolve after diesel subsidy removal

    Government Action

    Long lines at fuel stations ease after the price increase, but social pressure mounts as unions organize opposition to the IMF-backed austerity program.

  3. IMF agreement enacted via Official Gazette

    Government Action

    Law 1765, publishing the $1.9 billion IMF agreement, appears in Bolivia's Official Gazette, bringing the deal into effect.

  4. Diesel price nearly doubles under Supreme Decree 5716

    Government Action

    Diesel set at 17.95 bolivianos (about $1.63) per liter, up from 9.80. The price is now indexed to international import costs plus transport, storage and taxes.

  5. Protests persist over subsidy removal

    Protest

    CSCIOB general secretary Aquilardo Caricari criticizes the 'dieselazo', saying the government misled Bolivians about who the price increase would affect.

  6. Senate ratifies loan; diesel subsidy ends

    Legislative

    Senate ratifies $1.9 billion IMF loan; Paz ends diesel subsidies hours later.

  7. Lower house approves loan

    Legislative

    Chamber of Deputies approves the deal; Congress extends state of emergency 90 days.

  8. Bolivia and IMF formalize agreement

    Negotiation

    Staff-level agreement signed on the 36-month Extended Fund Facility.

  9. Road blockades paralyze Bolivia

    Protest

    Weeks of blockades demand Paz's resignation; he declares a state of emergency.

  10. Rodrigo Paz takes office

    Political

    Market-friendly president ends nearly two decades of socialist rule in Bolivia.

  11. Chronic fuel shortages begin

    Crisis

    Declining natural gas exports deprive Bolivia of dollars needed to import fuel.

Scenarios

1

IMF board approves loan on schedule, austerity proceeds

Deadline passed (Oct 2, 2026)

Discussed by: Government projections, AP reporting, Economy Minister Christian Morales

The IMF executive board approves the Extended Fund Facility on October 2 as expected. The first disbursement of about $250 million arrives, Bolivia removes fuel subsidies on schedule, and reserves rebuild toward the projected $6 billion by end of 2026. Protests continue but the program holds.

2

Protests force partial reversal of subsidy cuts

Possible Resolves by Dec 16, 2026

Discussed by: Bolivian Workers' Central, Evo Morales, AP reporting

Renewed road blockades and strikes pressure the government as the state of emergency nears expiry. Paz restores some diesel price support or delays full subsidy removal, straining the IMF agreement and risking suspension of disbursements.

3

IMF delays, program stalls

Unlikely Resolves by Nov 15, 2026

Discussed by: Economy Minister Christian Morales, congressional opposition

The IMF delays final approval beyond October 2, citing unmet conditions or political instability. Without the first disbursement, fuel shortages return and the fiscal position deteriorates further, deepening the crisis.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

September–October 2003

Bolivia's Gas War (2003)

Protests against plans to export natural gas through Chile shut down La Paz and blocked roads across the country. President Gonzalo Sánchez de Lozada resigned and fled to the United States after security forces killed dozens of protesters.

Then

Vice President Carlos Mesa took power and halted the gas export project.

Now

The uprising became a symbol of popular resistance to resource policy and helped build support for Evo Morales, who won the presidency in 2005.

Why this matters now

Shows how fuel and resource policy disputes can topple Bolivian presidents — a risk Paz faces as unions threaten renewed blockades.

August 1985

Bolivia's 1985 shock therapy

President Víctor Paz Estenssoro's 'New Economic Policy' ended hyperinflation that topped 20,000% annually. It cut public spending, lifted price controls, and froze wages, triggering strikes met with a state of siege.

Then

Inflation fell within months, but unemployment and hardship rose sharply.

Now

The stabilization became the foundation of Bolivia's economic recovery, though critics blamed it for deepening inequality.

Why this matters now

The last time Bolivia imposed shock austerity under IMF guidance, it worked economically but carried heavy social costs — the same trade-off Paz faces now.

June 2018 – 2020

Argentina's 2018 IMF program

Argentina secured a record $57 billion IMF standby arrangement amid a currency crisis and shrinking reserves. The program required deep spending cuts and deficit targets.

Then

The program failed to stabilize the peso; Argentina returned to crisis and defaulted on its debt in 2020.

Now

It became a cautionary tale about IMF programs in politically fragile economies, with austerity worsening recession before the election of a left-wing government.

Why this matters now

A failure model for Bolivia: a Latin American country that lost reserves, turned to the IMF, and still ended in default when the program could not be sustained.

Sources

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Associated Press Euronews Reuters via MarketScreener AP via Local10 teleSUR English Economia y Finanzas AP via ClickOrlando AP via Click2Houston Bloomberg Latin Times Reuters Steptoe 24EcoNews BT News teleSUR English teleSUR English Latin Times 24EcoNews