The government of Bolivia and the International Monetary Fund (IMF) reached a preliminary agreement to launch a 36-month economic program backed by approximately $1.9 billion in loans, which according to the IMF would contribute to the stabilization of the economy. However, the agreement, reached on Wednesday, July 29, also raises concerns about possible cuts to...

The government of Bolivia and the International Monetary Fund (IMF) reached a preliminary agreement to launch a 36-month economic program backed by approximately $1.9 billion in loans, which according to the IMF would contribute to the stabilization of the economy. However, the agreement, reached on Wednesday, July 29, also raises concerns about possible cuts to public spending, the sale of strategic assets to transnational corporations, and prioritizing the payment of external debt over investments in development.

The understanding was reached at the technical level as part of the IMF’s Extended Fund Facility (EFF), according to a statement from the IMF. Its entry into force will depend on the approval of the IMF Executive Board and the fulfillment of the prior measures agreed upon by the parties.

The IMF noted that the program would address the imbalances facing the Bolivian economy, including the persistence of fiscal deficits, the decline in oil and gas production, the drop in international reserves, rising inflation, and distortions present in the exchange and goods markets.

The Bolivian minister of Economy, Gabriel Espinoza, confirmed the agreement and explained that the loan would have an estimated interest rate between 4% and 4.5%. He added that the plan includes three years of execution and a grace period of four and a half years, so Bolivia would not have to start repaying the loan in the short term.

Espinoza announced that the bill related to financing will be sent next week to the Plurinational Legislative Assembly, which he urged to expedite its analysis and approval.

He stated that the IMF did not impose specific measures to grant the credit and that the organization supported the economic proposal presented by the Bolivian government after evaluating its viability and sustainability.

The government program includes a review of the price structure, the reduction and reorganization of public spending, adjustments in the resources allocated to state-owned enterprises, budget reordering, and actions to move toward fiscal stability, as well as measures aimed at stimulating investment, increasing productivity, and promoting structural modifications in various regulations.

At the end of 2025, the neoliberal government of President Rodrigo Paz announced a 30% cut to public spending, eliminated fuel subsidies—severely impacting low-income citizens, and abolished four taxes, including the tax on large fortunes, despite warnings that this would reduce the government’s fiscal revenues.

The IMF estimated that the agreement could facilitate the mobilization of at least $5 billion over the three years of the program’s duration through additional contributions from the World Bank, the Inter-American Development Bank (IDB), and other international financial institutions.

The economy minister said that these resources would help strengthen the reserves of the Central Bank of Bolivia and stabilize the exchange rate of the dollar in the national market.

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However, the amount of the agreed loan is less than the $5 billion initially announced by the government. The economy analyst Martín Moreira pointed out that the figures communicated were decreasing during the negotiations, going from $5 billion to $2.8 billion and subsequently to $2.5 billion.

Moreira questioned the scope of the policies associated with the IMF programs, stressing that they promote less state participation in productive activities. According to his analysis, this approach could lead to shutdown or privatization of public companies, facilitate a greater presence of transnational companies in strategic sectors, and prioritize the payment of external debt over investment intended for development.

The analyst also warned that some of the measures underway could include cuts to state spending, reductions in public employment, shutdown of state-owned companies, and possible modifications to subsidies and social programs.

Featured image: The IMF logo at its headquarters in New York. File photo.

(Telesur)

Translation: Orinoco Tribune

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