Bolivia's Congress Approves $1.9 Billion IMF Loan as Unions Threaten Unrest
Bolivia's Congress approved a $1.9 billion IMF loan, but unions warn of renewed protests over fuel subsidy cuts and spending reductions.
Bolivian lawmakers gave final approval to a $1.9 billion loan agreement with the International Monetary Fund on Friday, handing the government a significant win as it seeks to pull the country out of a deepening economic crisis. The Senate ratified the deal a day after the lower house passed it, clearing the last legislative obstacle for the three-year financing program.
The funds are intended to replenish Bolivia's dwindling foreign reserves and steady an economy burdened by high inflation and sluggish growth. The IMF announced a staff-level agreement in July following months of talks with the market-friendly administration that took office last year, ending nearly two decades of socialist rule. The program still needs the IMF executive board's sign-off before any money is released.
President Rodrigo Paz welcomed the vote, calling it a "historic step" and a "resounding signal of political maturity, unity and economic certainty." Economy Minister Christian Morales told senators the agreement would boost confidence among other lenders, including the World Bank and the Inter-American Development Bank, and help secure roughly $5 billion in additional financing.
However, the conditions tied to the loan — notably the removal of fuel subsidies — risk reigniting unrest. Weeks of road blockades in June and July had paralyzed much of the country as demonstrators called for Paz's resignation. Congress on Thursday extended a state of emergency for another 90 days, a measure that permits military intervention and the suspension of some civil liberties.
The Bolivian Workers' Central, the main labor federation, and other unions have strongly opposed the IMF deal, cautioning that required spending cuts would raise living costs and worsen hardship for struggling families. Paz has already begun scaling back Bolivia's long-standing fuel subsidies and aims to eliminate them entirely by January.
Although Paz's Christian Democratic Party lacks a congressional majority, centrist and right-wing lawmakers dominating both chambers supported the agreement. The Movement Toward Socialism, which governed for years after Evo Morales became president in 2005, now holds only two of 130 lower-house seats and none in the 36-member Senate.
Falling natural gas exports have left Bolivia short of dollars to import gasoline and diesel, fueling chronic fuel shortages since 2023. Selling imported fuel at subsidized prices has further strained public finances. Paz has pledged to redirect subsidy spending toward oil and gas exploration and production.
"We are finalizing crucial agreements for Bolivia," Paz said Friday, warning of difficult decisions ahead as the Iran war drives up global fuel costs. "International prices are forcing us to make complex choices."