Bolivia’s Congress approves $1.9bn IMF loan amid protest threats

Though trade unions warn the deal's austerity conditions could spark renewed unrest, the Associated Press news agency documented, bolivia's Congress has approved a $1.9bn International Monetary Fund loan in a major victory for President Rodrigo Paz.

Key points

• Under the IMF programme, Bolivia's first multi-year arrangement with the fund since 2006, Paz must keep cutting those subsidies and reining in spending.
• Paz, an ally of US President Donald Trump, called Friday's vote a "historic step" for Bolivia.
• Congress extended a state of emergency, declared to support clear the roads, for another 90 days on Thursday.
• "We are finalising crucial agreements for Bolivia, " Paz remarked, warning that challenging decisions lie ahead as the Iran war pushes up global fuel costs.
• Paz's Christian Democratic Party does not hold a majority.

Paz's Christian Democratic Party does not hold a majority. But centrist and right-wing parties. It now dominate Congress after the long-ruling leftist MAS party was reduced to just two seats in the 130-seat lower house and none in the Senate, rallied behind the programme on Friday.

"We are finalising crucial agreements for Bolivia, " Paz remarked, warning that challenging decisions lie ahead as the Iran war pushes up global fuel costs. "International prices are forcing us to make complex choices, " he continued.

In practice, the loan, which is meant to fix a crisis years in the making, still needs approval from the IMF's Executive Board before any funds is issued.

Bolivia once earned billions from natural gas exports, but years of underinvestment have caused production to collapse, leaving the country short of the dollars it needs to purchase imported fuel.

To keep fuel affordable for ordinary Bolivians, the administration spent heavily to hold petrol and diesel cheaper than even in Saudi Arabia, one of the world's biggest crude producers, a subsidy that has since drained foreign reserves and fed a black market in smuggled fuel.

He has already raised fuel rates and aims to scrap the subsidy entirely by January. Authorities say the agreement should additionally unlock roughly $5bn more in financing from the World Bank and other lenders.

After weeks of road blockades in June and July that paralysed much of the country as protesters demanded Paz's resignation, the Bolivian Workers' Central, the country's main union federation, has denounced the plan, saying the cuts will push up living costs for struggling families.

Taken together, the developments around bolivia's Congress approves $1.9bn IMF loan amid protest threats point to a situation that is still moving, and the coming days should bring more clarity.