Bolivia faces choice between fuel subsidies and hydrocarbon investment

Bolivian President Rodrigo Paz has presented a strategic dilemma regarding the nation's fiscal priorities: whether to continue subsidizing imported fuels or to redirect those funds toward hydrocarbon exploration and production to secure future energy resources.

During the commencement of drilling at the Junín-9D well, Paz noted that current subsidies for gasoline and diesel consume significant public resources that could otherwise be allocated to healthcare, education, and infrastructure. He stated that the country must choose between investing in wells to guarantee future resources or spending funds to maintain domestic fuel prices below international levels.

To address immediate needs, the government has implemented Supreme Decree 5683, which doubles the funds from the National General Treasury (TGN) allocated to YPFB to 2,000 million bolivianos. This measure aims to guarantee fuel imports and stabilize the economy against dollar fluctuations through January 2027. However, YPFB President Sebastián Daroca has warned that the current subsidy model is unsustainable due to rising international prices and smuggling.