Bolivia ends the diesel subsidy and ties the pump to import cost
Reuters said President Rodrigo Paz announced on Friday an end to state diesel subsidies, after Bolivia imported about 90 per cent of its diesel and spent about 55 million dollars a week on the support. Euronews said lawmakers had hours earlier approved a 1.9 billion dollar IMF loan and that Paz then cut diesel support while leaving gasoline subsidised for now.
Economics & Markets··Evening
Paz set one diesel price: whatever it costs to buy abroad
Reuters, datelined La Paz on 18 September, said Paz ended state diesel subsidies and moved to a unified price so the fuel would cost what it costs to buy abroad, citing smuggling and black-market resale as drivers of a weekly gap. Bolivia, in that account, imports roughly 90 per cent of its diesel and had been spending about 55 million dollars a week on the support. A dual-price system from August had charged high-volume users 18 bolivianos (2.60 dollars) a litre and others 9.80 bolivianos. Euronews said Paz, hours after Congress backed the IMF loan, announced an immediate end to subsidies for the diesel that powers trucks, buses and tractors, quoting him that no one can buy something expensive and sell it cheap.[1], [2]
The IMF vote landed the same Friday as the diesel cut
Euronews said Bolivian lawmakers approved a 1.9 billion dollar (1.65 billion euro) IMF loan on Friday, a step Paz's government needed while unions threatened new protests, and that the diesel cut came hours later as a move toward IMF spending curbs. Gasoline, used mainly in private cars, would stay subsidised for now after earlier cutbacks. Reuters did not lead on the Fund vote; it described cash transfers and preferential credit for households and key sectors to offset the pump change, and said domestic prices would fall if international costs decline.[1], [2]
Cash for 2.9 million people is the announced cushion, not a new diesel price
Euronews said Paz announced about 79 million dollars in cash assistance for approximately 2.9 million Bolivians, plus preferential loans for truckers, small businesses and producers facing the new diesel costs, and pledged to send former subsidy money to schools, hospitals and roads. Reuters likewise said the government unveiled cash transfers and preferential credit lines for households and key sectors. The pump itself, in the La Paz account, now tracks the import cost rather than the old 9.80 boliviano subsidised rung.[1], [2]
