Supreme Decree 5652 established the timeline by freezing domestic fuel prices for most consumers through the end of 2026, while Decree 5667 guarantees LPG pricing at Bs 22.50 through December 31. The IMF memorandum specifies that the 2027 budget will contain no allocations for fuel subsidies from either the Treasury or state enterprises. The phased approach preserves diesel subsidy elimination while maintaining gasoline support through December, with technical staff estimating subsidy costs will decline from 2.9% of GDP in 2026 to zero in early 2027.
The IMF emphasized that subsidy removal must be accompanied by significant expansion of social safety nets, with authorities committed to ensuring adjustment burdens do not fall disproportionately on poor and vulnerable households. The program includes an indicative floor for social assistance spending, building on the PEPE program deployed during the initial subsidy reduction in January 2025. A unified social registry is planned to improve targeting, as current assistance reaches some non-poor households while missing vulnerable populations.
The $1.9 billion IMF credit, approved October 2, supports Bolivia’s broader economic reform program aimed at restoring macroeconomic stability after years of declining gas production, central bank deficit financing, and an overvalued fixed exchange rate that depleted dollar reserves. The agreement includes fiscal consolidation targets limiting the non-financial public sector deficit to Bs 36.8 billion in 2027, equivalent to 6.7% of GDP compared to 9.2% projected for 2026. The IMF projects GDP will contract 3% in 2026 and 1.5% in 2027 before recovering modestly.
This article was curated and published as part of our South American energy market coverage.
