Bolivia · Economy

A country that froze fuel prices in 2005 has just let them go. The queues vanished overnight, and so did the cost of getting anywhere.

If you live in Bolivia or ship anything through it, the Bolivia diesel subsidy ending on Saturday is the most consequential thing to happen there this year. Diesel costs 83 percent more than it did on Friday. The fuel queues have gone. Bus fares have roughly doubled, and several sectors have called blockades.

Urban operators in La Paz, Tarija, Sucre and Potosi pulled vehicles off the road pending new fare schedules.

What the Bolivia diesel subsidy decree changed

President Rodrigo Paz signed Supreme Decree 5716 on Friday 18 September and announced it that evening. From Saturday, diesel sells at Bs 17.95 a litre including tax, against Bs 9.80 before. That is 83 percent, and in dollars it takes the pump price from about US$0.89 to about US$1.63 a litre.

The bigger change is structural. The price is no longer set by decree at all. It now tracks an international diesel reference plus transport, storage, inspection, financing and customs costs, recalculated on business days. It only moves when the calculation drifts more than 5 percent from the posted price.

This is the second rise this year, which most coverage has missed. The price frozen in 2005 was Bs 3.72 a litre. It went to Bs 9.80 in January and to Bs 17.95 on Saturday. That is roughly a 382 percent increase in nine months.

Petrol has not changed. The hydrocarbons minister said so explicitly on Friday. But the law authorising the country’s new loan commits the government to ending all fuel subsidies from January 2027.

Why it happened now

Bolivia imports roughly 95 percent of the diesel it burns, at a cost of around US$90 million a week. Gas exports have meanwhile fallen from US$6 billion in 2014 to just over US$1 billion in 2025. Fuel imports have exceeded gas export income since 2022.

The buffer that used to absorb that is gone. Net international reserves stood at US$3.54 billion in March, but 95 percent of it is gold. Liquid foreign currency was US$144 million. That is why the fixed exchange rate collapsed in June after fifteen years, and why the fuel queues got worse every month.

There is an International Monetary Fund programme behind this, and it is worth being precise about its stage. A staff-level agreement for about US$1.9 billion over 36 months was announced on 29 July. Congress approved the borrowing on 18 September. The Fund’s executive board has not yet signed off, and ending the diesel subsidy is understood to be one of the conditions for it doing so.

The government also says about 40 percent of the fuel it was buying went to smuggling, illegal mining or resale. At Bs 17.95 Bolivian diesel now costs more than in Brazil, Chile or Argentina, which removes that incentive entirely.

What is actually happening on the roads

Less than the headlines suggest, so far, but it is fluid. The one confirmed blockade is on the old Santa Cruz to Cochabamba highway, at Mataral and Los Negros, installed on Monday by valley transport operators. Several other groups announced blockades that did not materialise, at least not on Monday.

Sugar and rice growers gave the government until Monday to reverse the decree. Coca growers in the Cochabamba tropics declared an emergency. The national drivers’ confederation called a meeting for Tuesday to decide on strikes and blockades, and refused to meet the government until it had met. Urban teachers have called a national march for 30 September rather than blockades.

Blockades are currently illegal. Bolivia has been under a state of exception since June, extended by 90 days on 17 September. The defence minister said police and the military would be used if necessary. Around 800 officers and troops went to road points in La Paz department, with more on the Cochabamba to Oruro road.

What it means if you are there

Fuel is available. This is the counterintuitive part and it is real: the queues that ran for hours, sometimes days, have largely disappeared in Santa Cruz, Cochabamba and La Paz. You will pay a great deal more, but you will be able to fill up.

Travel costs have jumped. Companies at the La Paz terminal raised fares 40 percent, Cochabamba up to 15 percent, and long interdepartmental routes by 90 to 100 percent. Urban drivers want the flat fare doubled from Bs 3 to Bs 6 (about US$0.27 to US$0.55). One operator said only 60 percent of its vehicles were running.

Check the road on the morning you travel rather than the night before. The old Santa Cruz to Cochabamba route is the one to avoid. Expect heavy police and military presence on trunk roads, and treat border crossing status as unverified until you confirm it.

The compensation package softens some of this. A cash transfer of Bs 874 million (about US$79 million) is going to around 2.9 million people. The school bonus rises from Bs 200 to Bs 300 (about US$18 to US$27). And up to Bs 800 million (about US$73 million) in credit at around 6 percent is available to hauliers, traders and producers.

The precedent everyone in Bolivia remembers

In December 2010 Evo Morales raised diesel by about 83 percent, almost exactly the figure now. The drivers struck, the labour confederation turned against him, and he cancelled the decree five days later. Bolivians call that episode the gasolinazo, and it is the reason no government touched the price for another fifteen years.

The difference this time is that the alternative has run out. In 2010 the subsidy cost US$380 to US$700 million a year. Paz puts it at US$55 million a week, more than US$2.6 billion a year, against reserves that are almost entirely gold.

So the question is not whether the policy is painful. It is whether a government three months into a fuel crisis and one month from an IMF board meeting can absorb the protest without reversing course. Watch the drivers’ decision and the labour confederation’s emergency meeting, which has been called but not yet scheduled.

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