Diesel subsidies ended September 19, raising the retail price from 9.80 bolivianos to 17.95 bolivianos per liter, an 83 percent increase affecting large-scale consumers after subsidies for other users were removed August 17. Hydrocarbon Minister Marcelo Blanco confirmed gasoline subsidies remain at 6.96 bolivianos per liter with no immediate removal decision, though the government is working to increase ethanol blending to diversify fuel composition and expand availability.
President Rodrigo Paz defended the policy as a choice between subsidies and development, arguing public funds should finance permanent infrastructure rather than weekly subsidy outlays. The administration increased Treasury allocations for subsidies from an initial 1 billion bolivianos in July to 6 billion bolivianos as international fuel costs rose. Officials cited fuel diversion to black-market resale and cross-border smuggling as draining subsidy resources, with Blanco estimating 40 percent of purchased fuel flows to illicit activities.
The congressional approval of the IMF facility September 18 commits Bolivia to complete subsidy elimination by January 2027, linking fiscal adjustment to access to multilateral financing. Navarro indicated the transition involves shifting support from supply-side price controls to demand-side cash transfers targeting low-income households, though specific transfer amounts and eligibility criteria remain undefined. The government announced 2.9 million people will receive payments under the PEPE program and allocated 800 million bolivianos in preferential credit for heavy transport, artisans and small retailers at six percent annual interest. Public Works Minister Mauricio Zamora acknowledged the diesel price change will pressure transport costs and pledged working groups with trucking sectors to establish compensation mechanisms as the policy’s impact on freight rates and consumer prices materializes.
This article was curated and published as part of our South American energy market coverage.
