Bolivia scraps diesel subsidy and secures $1.9bn IMF loan amid fuel crisis

On September 18, 2026, Bolivia's Congress approved a $1.9 billion IMF loan, and President Rodrigo Paz announced the end of state diesel subsidies to combat chronic fuel shortages. The country imports 90% of its diesel, costing $55 million weekly in subsidies. While centrist and right-wing parties backed the measures, the Bolivian Workers' Central union warned of rising living costs and potential protests, following severe road blockades in June and July.

IMF loan approval

• ▪The $1.9 billion International Monetary Fund loan is Bolivia's first multi-year arrangement with the fund since 2006.
• ▪Bolivian officials state that the $1.9 billion International Monetary Fund agreement should unlock approximately $5 billion more in financing from the World Bank and other lenders
• ▪Bolivia's Congress approved a $1.9 billion International Monetary Fund loan on September 18, 2026, which requires approval from the fund's Executive Board before any money is released.

Diesel subsidy elimination

• ▪President Rodrigo Paz's elimination of the diesel subsidy replaces a dual-pricing system introduced in August 2026 that charged high-volume consumers 18 bolivianos ($2.60) per liter while maintaining a subsidized rate of 9.80 bolivianos for others
• ▪Bolivian President Rodrigo Paz announced the end of state diesel subsidies on September 18, 2026, shifting the country to a unified pricing model where domestic prices track global benchmarks.
• ▪To offset the financial strain of ending Bolivia's diesel subsidy, the administration of President Rodrigo Paz unveiled targeted relief measures, including direct cash transfers and preferential credit lines
• ▪President Rodrigo Paz plans to scrap all fuel subsidies entirely by January
• ▪Bolivia imports approximately 90% of its diesel, and the government spent about $55 million weekly on subsidies prior to their elimination by President Rodrigo Paz

Fuel crisis economic decline

• ▪President Rodrigo Paz cited the ongoing Iran war as a factor pushing up global fuel costs and forcing complex choices regarding domestic prices.
• ▪Prior to President Rodrigo Paz's diesel subsidy cuts, the Bolivian government heavily subsidized petrol and diesel to keep them cheaper than in Saudi Arabia, which drained foreign reserves and fueled a black market in smuggled fuel
• ▪Bolivia's fuel crisis is driven by a collapse in natural gas production due to years of underinvestment, leaving the country short of foreign currency reserves to purchase imported fuel.

Union opposition protest threats

• ▪On September 17, 2026, the Bolivian Congress extended a state of emergency, originally declared during the June and July road blockades to help clear blockaded roads, for an additional 90 days
• ▪The Bolivian Workers’ Central, the country’s main union federation, denounced the $1.9 billion International Monetary Fund loan agreement, warning that subsidy cuts will increase living costs and could trigger renewed protests
• ▪Bolivia experienced weeks of road blockades in June and July 2026 as protesters demanded the resignation of President Rodrigo Paz.

Congressional political realignment

• ▪President Rodrigo Paz's Christian Democratic Party does not hold a majority in Congress, but centrist and right-wing parties rallied to approve the International Monetary Fund loan on September 18, 2026.
• ▪The long-ruling leftist MAS party was reduced to two seats in the 130-seat lower house of Congress and zero seats in the Senate.