By Lucinda Elliott and Rodrigo Campos
July 29 (Reuters) – The International Monetary Fund has reached a staff-level agreement with Bolivia on a $1.9 billion financing program, the IMF said on Wednesday, as the country looks to stabilize an economy facing its deepest crisis in decades.
The three-year deal, which requires approval from the IMF’s Executive Board as well as Bolivia’s Congress, moves the country closer to cash needed to rebuild foreign reserves and ease a dollar shortage that has constrained imports and fueled inflation.
Bolivia’s economy has been hobbled by declining natural-gas production, fiscal deficits exceeding 10% of GDP and nearly exhausted foreign-currency reserves, the IMF said in a 2025 review. President Rodrigo Paz has cut fuel subsidies and reduced public spending to stabilize finances, but the austerity measures triggered anti-government protests and roadblocks that disrupted the economy for nearly two months earlier this year.
If approved, the deal would mark Bolivia’s first multi-year IMF arrangement since 2006. Despite that milestone, the financing package is considerably lower than the Bolivian government’s expectations for a deal in the range of $2.5 billion to $2.8 billion.
The IMF said the deal could also spur financing from the World Bank, the Inter-American Development Bank and other multilateral lenders for a total of more than $5 billion.
The financing is contingent on economic reform under Paz, who took office in November.
“The new administration has launched a decisive reform plan to address these challenges and restore macroeconomic stability,” the IMF’s Joana Pereira said in a statement.
“The IMF-supported program is designed to back these efforts, rebuild resilience, and help put the economy on a job-rich and sustainable growth path.”
In a statement on Wednesday, Bolivia’s Economy Ministry hailed the agreement, saying it would support the government’s economic program to restore stability, rebuild confidence and strengthen the country’s growth outlook.
Bolivian dollar bonds were little changed in price on Wednesday, with yields hovering between 8% and 9% depending on maturities.
The program may still face hurdles in Congress, where IMF borrowing remains politically sensitive.
In 2020, the IMF approved over $300 million in crisis financing for Bolivia during the COVID-19 pandemic under a transitional interim government, but Bolivia could not use the cash after Congress withheld authorization. The central government repaid it early, calling the operation irregular and costly.
(Reporting by Rishabh Jaiswal in Bengaluru, Daina Beth Solomon in Mexico City, Lucinda Elliott in Buenos Aires and Rodrigo Campos in New York; Editing by Sanjeev Miglani)
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