Bolivia faces political hurdles in removing fuel subsidies

The administration of President Rodrigo Paz in Bolivia is facing increasing political and social challenges regarding its plan to phase out hydrocarbon subsidies by 2027, a commitment made to the International Monetary Fund (IMF).

Energy experts Álvaro Ríos and Fernando Rodríguez warn that the government has lost significant credibility and public support. They note that the administration appears to be reacting late to an energy crisis characterized by long queues for gasoline and diesel. The experts suggest that the perception of the government following external pressures from the IMF rather than domestic needs is complicating the political landscape.

In response to the planned subsidy removal, Economy Minister Christian Morales stated that the government is evaluating compensation mechanisms, such as bonuses for the transportation sector, to mitigate the impact on vulnerable populations. While the exact future price of unsubsidized fuel remains undetermined, officials emphasize that the current subsidy model is unsustainable as it erodes the Central Bank of Bolivia’s international reserves. To address energy production, the government is prioritizing the exploration of areas like Tariquía.