Bolivia’s Congress approves $1.9 billion IMF deal, triggering threats of unrest

Bolivia's Congress has authorized a $1.9 billion loan agreement with the International Monetary Fund, providing the conservative government a significant achievement in addressing the nation's severe economic turmoil. Meanwhile, unions have vowed to resume protests if necessary.

The Senate ratified the IMF deal just one day after the lower house approved it, overcoming the final legislative hurdle for the three-year financing program. This initiative aims to replenish depleted foreign reserves and stabilize the struggling economy, which is characterized by high inflation and sluggish growth. The IMF initially announced the staff-level agreement in July following months of negotiations with Bolivia's market-friendly government.

President Rodrigo Paz, part of a new wave of Latin American leaders aligned with the Trump administration, hailed the vote as a "historic step" and a "resounding signal of political maturity, unity, and economic certainty." Economy Minister Christian Morales informed senators that the agreement would bolster confidence in the government from other lenders, including the World Bank and the Inter-American Development Bank, potentially unlocking around $5 billion in additional financing.

However, the agreement's conditions, which include scrapping fuel subsidies, could reignite unrest in Bolivia. Demonstrators had already staged weeks of road blockades in June and July, leading to widespread disruption. Congress extended the country's state of emergency for another 90 days to manage the protests, enabling military intervention and the suspension of certain civil liberties.

Bolivian Workers' Central, the main labor federation, and other unions have vehemently opposed the IMF loan, warning that required government spending cuts would increase living costs and exacerbate hardship for struggling families. Paz's Christian Democratic Party, which lacks a majority in Congress, saw the majority of centrist and right-wing lawmakers back the deal.

The Movement Toward Socialism, the party that previously dominated Bolivian politics, now holds just two of the 130 seats in the lower house and none in the 36-member Senate. Declining natural gas exports have left Bolivia short on dollars needed to import essential fuels, contributing to chronic fuel shortages since 2023, a situation that has persisted under Paz's leadership.