Key facts
- Bolivia approved a $1.9 billion IMF loan agreement on Friday.
- The loan is part of a 36-month IMF Extended Fund Facility program.
- The agreement will facilitate access to over $5 billion in additional funds from the World Bank, IDB, and other partners.
- The stabilization program includes reducing the fiscal deficit, enforcing monetary discipline, and adopting a more flexible exchange rate regime.
- The program also seeks to limit monetary financing of the public deficit and calls for the elimination of government fuel subsidies.
- Economy Minister Christian Morales stated that net international reserves were $3.17 billion, with only $52 million in liquid reserves.
Bolivian lawmakers approved a crucial agreement with the International Monetary Fund (IMF) on Friday, paving the way for the country to access $1.9 billion in financing. The deal is part of a 36-month Extended Fund Facility (EFF) program aimed at stabilizing the nation's economy, which has been grappling with foreign currency shortages, fiscal deterioration, and declining international reserves.
The approval by both the lower house and the Senate signifies a cornerstone of Bolivia's strategy to regain access to external financing. In return for the IMF loan, Bolivia is committed to implementing a stabilization program. This includes measures to reduce the fiscal deficit, enforce greater monetary discipline, adopt a more flexible exchange rate regime, and enact reforms designed to boost productivity and improve the investment climate.
Key aspects of the program also involve limiting the monetary financing of the public deficit and phasing out government subsidies for fuel. Economy Minister Christian Morales defended the agreement, highlighting the precarious state of the country's reserves upon the current government's inheritance, with only $52 million in liquid reserves out of $3.17 billion in net international reserves. The government projects reserves to increase significantly by 2028 and plans to reduce the fiscal deficit from 9.1% of GDP in 2026 to 3.8% by 2028.