Bolivia ends diesel subsidy after IMF loan approval

Bolivia is ending its diesel subsidy after Congress approved a loan from the International Monetary Fund aimed at stabilising the country’s finances.

President Rodrigo Paz said in a state television address that, starting Friday, diesel would cost the same as the government pays to buy it abroad. The Bolivian government imports gasoline and diesel at international prices and has resold them domestically at a loss.

The government said this month it had agreed to end all fuel subsidies by 2027 under a $1.9 billion IMF bailout agreement. A decision on gasoline subsidies is still pending.

Bolivia has been facing its worst economic crisis in four decades, with fuel subsidies draining international dollar reserves and leaving the state short of money to import fuel and other essentials.

The IMF deal would prevent the government from keeping fuel prices artificially low. To cushion the impact, the government would increase spending on some social programmes.

Paz recently doubled diesel prices for large consumers such as farmers, arguing that cross-border fuel smuggling was causing shortages. That increase sparked protests, but there has not yet been a repeat of the mass anti-government protests and blockades that paralysed parts of Bolivia in May and June.