Bolivia’s Congress backs IMF loan as unions warn of unrest

Bolivia’s Congress has approved a $1.9bn loan programme from the International Monetary Fund, a political victory for President Rodrigo Paz. The agreement still requires approval from the IMF’s Executive Board before any money can be released.

Trade unions warn that the programme’s austerity measures, including further fuel-subsidy cuts, could raise living costs and trigger renewed unrest.

Centrist and right-wing parties support the programme

Paz’s Christian Democratic Party does not hold a majority, but centrist and right-wing parties backed the measure on Friday. The long-ruling leftist MAS party now has only two seats in the 130-seat lower house and none in the Senate.

Paz described the vote as a historic step and said rising global fuel costs linked to the Iran war were forcing Bolivia to make difficult decisions. Officials say the IMF deal could help unlock about $5bn in additional financing from the World Bank and other lenders. Read the context: US War on Iran Costs $37.5bn; Pentagon Requests Additional $67bn Funding.

Fuel subsidies are at the centre of the deal

Bolivia’s natural-gas production has collapsed after years of underinvestment, leaving the country short of the dollars needed to buy imported fuel. Government spending to keep petrol and diesel prices low drained foreign reserves and contributed to a black market in smuggled fuel.

The IMF programme requires Paz’s government to continue reducing fuel subsidies and restrain spending. He has already increased fuel prices and plans to remove the subsidy entirely by January.

Unions point to recent blockades

The Bolivian Workers’ Central, the country’s main union federation, has rejected the plan, saying the cuts will increase costs for struggling families. Its warning follows road blockades in June and July that paralysed much of the country as protesters called for Paz’s resignation.

Congress extended a state of emergency for another 90 days on Thursday. The measure was declared to help clear the roads.

What happens next

The IMF’s Executive Board must approve the arrangement before Bolivia can receive any funds.