Bolivia slashes diesel subsidies as its Congress ratifies $1.9 billion IMF deal to ease deep economic crisis
La Paz hopes the deal, awaiting final authorisation by the IMF’s executive board, will open other lines of finances from different institutions, like the World Bank, as the country works to restore its struggling credit status.
Bolivia's Congress has approved a $1.9 billion loan agreement with the International Monetary Fund (IMF) to address the country's severe economic crisis. President Rodrigo Paz immediately announced the elimination of diesel subsidies for trucks, buses, and tractors, aligning with IMF demands. Gasoline subsidies will continue, but have been reduced in recent months.
The Bolivian Senate ratified the IMF deal a day after the lower house approved it, meeting the final legislative requirement for the three-year financing program. This assistance aims to replenish dwindling foreign reserves and stabilize an economy plagued by high inflation and weak growth. The IMF agreed to provide additional financing contingent on the implementation of stringent economic measures, including the removal of fuel subsidies.
Despite the IMF loan's support, Bolivia's main labor federation and other unions oppose it, predicting that required spending cuts will increase living costs and worsen hardship for low-income families. The country's fuel supply issues stem from declining natural gas exports and surging global oil prices, making the subsidy elimination particularly burdensome.
President Paz pledged $79 million in cash assistance and preferential loans, promising to redirect subsidy funds toward education, healthcare, and infrastructure.
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