Bolivia Congress approves $1.9bn IMF loan amid protest threats

Bolivia's Congress has approved a $1.9bn loan from the International Monetary Fund, giving President Rodrigo Paz a major political win as his government seeks to stabilise the economy. The vote came despite warnings from trade unions that the austerity conditions attached to the programme could trigger renewed unrest. The deal still requires approval from the IMF Executive Board before any funds can be released.

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Paz's Christian Democratic Party does not hold a majority in Congress, but centrist and right-wing lawmakers backed the package on Friday. The long-dominant leftist MAS party has been reduced to just two seats in the 130-seat lower house and none in the Senate, leaving the legislature reshaped in favour of the new governing coalition. Paz described the vote as a historic step and said difficult decisions lie ahead as global fuel costs rise.

The loan is intended to address a crisis that has built up over several years. Bolivia once earned billions from natural gas exports, but underinvestment has contributed to a collapse in production and a shortage of foreign currency needed to buy imported fuel. To keep petrol and diesel affordable, the government spent heavily on subsidies, a policy that drained reserves and helped create a black market in smuggled fuel.

Under the IMF programme, Paz is expected to keep cutting subsidies and rein in spending, with officials saying the agreement could also unlock about $5bn in additional financing from the World Bank and other lenders. The decision matters because fuel prices and subsidy reform have repeatedly triggered social tension in Bolivia. The Bolivian Workers' Central, the country's main union federation, has denounced the plan and said the cuts will raise living costs for struggling families.

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That warning comes after weeks of road blockades in June and July that paralysed much of the country and called for Paz's resignation. Congress also extended a state of emergency for another 90 days on Thursday to help clear roads, underlining the continuing sensitivity of the issue. The programme is Bolivia's first multi-year arrangement with the IMF since 2006, making it a significant shift in economic policy.

Paz has already raised fuel prices and plans to end the subsidy entirely by January, a timetable that could test public patience if inflation or shortages worsen. The government has framed the agreement as necessary to restore access to financing and prevent a deeper balance-of-payments crisis, while critics argue the burden will fall on households already under pressure. What happens next will depend on the IMF board's decision and on how quickly the government moves to implement the subsidy cuts and spending restraint.

It remains unclear how unions and other opposition groups will respond if prices rise further or if fuel supplies remain tight. The coming weeks are likely to show whether the congressional vote can translate into economic relief without reigniting the protests that have already disrupted the country this year.

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