Bolivia Approves $1.9B IMF Deal, Ends Diesel Subsidies
Bolivia Approves $1.9B IMF Deal, Ends Diesel Subsidies
The News
Bolivia's Congress approved a $1.9 billion loan agreement with the International Monetary Fund on Friday, clearing the way for the country to tap external financing as it fights a deep economic crisis.
The vote is a key victory for the conservative government of President Rodrigo Paz, which is facing foreign currency shortages, fiscal deterioration and declining international reserves, according to Reuters.
The package also moves Bolivia to eliminate diesel subsidies — a step that carries real political risk. Unions have warned that fuel subsidy cuts will push costs up and could trigger a new round of street protests.
Timeline
Bolivian lawmakers approve the agreement allowing the country to access $1.9 billion in financing from the IMF, with the government moving at the same time to end diesel subsidies.
Reporting on the vote spreads internationally as unions publicly threaten renewed protests over the subsidy cuts.
Reactions
Unions are the loudest opposition. They warn that stripping out fuel subsidies included in the IMF deal will raise prices for ordinary Bolivians and could set off protests, Al Jazeera reported.
For Paz's government, the approval is being treated as a win — congressional backing for an international loan it argues is necessary to stabilize the economy, per The Independent and the Associated Press.
What's Next
The approval allows Bolivia to access the $1.9 billion in IMF financing, and the government proceeds with ending diesel subsidies.
The open question is the street. Whether union threats turn into sustained protests over rising fuel costs is the next test for Paz.
More
The deal is aimed squarely at Bolivia's hard-currency problem: the country has been running short on foreign exchange while its international reserves fall and its fiscal position worsens. IMF financing is the government's route to external funding while it tries to right the books.
Poll
Was Bolivia right to take the IMF deal and cut diesel subsidies?
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