Bolivia lifts diesel 83% a day after Congress clears $1.9 billion IMF loan

President Rodrigo Paz ended Bolivia's remaining diesel subsidy a day after Congress cleared a $1.9 billion International Monetary Fund loan. Diesel, the fuel that moves the harvest, will now be sold at international prices. "No one can buy something expensive and sell it cheap," he said. The last Bolivian government that tried a jump of this size rescinded it within a week.

The new price is 17.95 bolivianos a liter, including VAT, 83% above the 9.80 bolivianos that truckers, bus operators and farmers had been paying. Local reports put the dollar equivalents at $0.89 and $1.63 a liter. Gasoline for private cars was left untouched.

Fuel subsidies, mainly diesel, had been costing about $55 million a week, according to figures attributed to the president. To cushion the blow, Paz announced about $79 million in cash assistance for roughly 2.9 million people, plus preferential loans for truckers, small businesses and producers. That cash is about a week and a half of the old weekly subsidy bill. It is not a replacement for the diesel price itself.

For a holder of the usual emerging-market bond funds, the honest consequence is little, yet. VanEck's actively managed emerging-market bond fund BEMBX, which etf.net grades B, listed a Bolivian Government International Bond at 1.77% of assets as of Friday, September 18. The iShares J.P. Morgan USD Emerging Markets Bond ETF AEMB, which etf.net grades A, does not carry Bolivia among the positions that move that fund. U.S. markets were closed Saturday; there is not yet a dated post-decree print on Bolivia's dollar bonds.

Bolivia imports about 85% of the diesel it uses. Paz presented the move as a way to end shortages that have disrupted harvests and delayed imported goods since 2023. Selling that fuel cheap has been a direct claim on dollars the country no longer earns from declining natural-gas exports. Net international reserves were $3.62 billion at the end of June, the central bank reported, only $666 million of that in foreign currency and the rest mostly gold. By September 1, the bank's president, David Espinoza, said high-liquidity reserves had reached $1.13 billion.

Decree 5716 ties diesel to the import bill

Supreme Decree 5716, adopted Friday and effective on publication Saturday, sets a single diesel price for every consumer. There is no leftover transport rate.

The old fixed price is gone. The new one is built from international diesel prices, plus logistics, transport, storage and taxes, converted at the central bank's official exchange rate. The Banco Central de Bolivia set that rate at 11.00 bolivianos per dollar, in force from Saturday, September 19. If the international reference moves more than 5% up or down, the pump price is reset. Inside that band, it stays put. Diesel will now follow the import market without another decree, and every move in the official rate is a second lever on the same price.

On September 7, the parallel dollar on Binance traded at 12.41 bolivianos, against an official rate of 12.58 that day. The two have been close since the bank dropped a 15-year peg of 6.96 bolivianos in late June and let the official rate float.

Gasoline was not repriced. It remains subsidized, and the government has previously pointed to a January decision on whether that support ends. A separate July decree already kept the subsidy on domestically produced liquefied petroleum gas through December 31. Decree 5716 is silent on LPG.

Officials expect an October 2 Fund vote

Officials expect the IMF Executive Board to vote on October 2 on the 36-month Extended Fund Facility of about $1.9 billion, equal to SDR 1,369 million, or 570% of Bolivia's quota. The Senate ratified the agreement on Friday, September 18, a day after the lower house, clearing the last legislative hurdle. Staff and the authorities reached that agreement on July 29. It would be Bolivia's first multi-year Fund program since 2006.

The July staff statement said the program aims to restore macroeconomic stability, rebuild international reserves, cut fiscal and external vulnerabilities, strengthen social protection and move to a more flexible, market-based exchange rate, with no monetary financing of the deficit. It also said the arrangement should help catalyze a broader financing package of more than $5 billion over the program period from the World Bank, the Inter-American Development Bank and other partners. Economy Minister Christian Morales told senators the congressional vote would give those lenders more confidence.

Paz called the vote a "historic step." The diesel decree is the first visible price of that step. The Fund's 2025 review put the direct cost of selling imported fuel at roughly half the international price at 3.9% of GDP in 2024, when the fiscal deficit exceeded 10% of GDP for a second year.

The 2010 fuel rise lasted a week

Bolivia's statistics institute put August consumer prices up 1.10% on the month and 5.02% over 12 months, with a January-August rise of 3.01%. In the same eight months of 2025, prices had already risen 18.09%. No post-decree fare schedule or food-price increase has been measured.

A Potosí drivers' leader warned that fares there could reach 5 bolivianos. Farmers, drivers and other productive groups rejected the measure and said they would protest. No nationwide strike date had been set as of Saturday morning.

The Bolivian Workers' Central, the main labor federation, had already opposed the IMF loan, arguing that the spending cuts would raise living costs. Road blockades in June and July paralyzed much of the country. Congress has extended a state of emergency for another 90 days.

In late 2010, then-President Evo Morales raised fuel prices by more than 70%. Transport stopped, food prices jumped, and the decree was rescinded within a week after talks with unions and indigenous groups. Saturday's increase is larger, it hits diesel rather than gasoline first, and Paz is attempting it with an IMF program, a Congress that just voted, and cash transfers already announced.