IMF Approves $1.9 Billion Aid Package for Bolivia to Curb Economic Recession
The IMF approved a $1.9 billion aid package for Bolivia to combat recession, featuring strict fiscal reforms, deficit reduction, and the phase-out of fuel subsidies by 2027.
The International Monetary Fund has approved a $1.9 billion aid package for Bolivia, including an immediate disbursement of $214 million, according to Bloomberg. The package, spanning 2026-2028, is designed to help President Rodrigo Paz curb a severe economic recession.
The approval comes about two weeks after the Bolivian parliament approved the agreement, as the country grapples with foreign exchange shortages, fiscal deterioration, and declining international reserves. In exchange for the aid, Bolivia must implement a stabilization program that includes reducing the budget deficit, enforcing stricter monetary discipline, adopting a more flexible exchange rate regime, and carrying out reforms to boost productivity and improve the investment climate. The agreement also includes the phase-out of government fuel subsidies by 2027.
Economy Minister Cristian Morales stated upon the parliamentary approval that the government inherited an economy with foreign exchange reserves of $3.17 billion, of which only $52 million were liquid reserves. The government projects that reserves will reach nearly $6 billion by the end of 2026, nearly $8 billion by 2028 upon the conclusion of the agreement, and about $9.07 billion by 2031. It also plans to reduce the fiscal deficit from 9.1% of gross domestic product in 2026 to 6.4% in 2027 and 3.8% in 2028.
