Bolivia approves $1.9 billion IMF deal in hopes of accessing external financing
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FILE PHOTO: A view of the International Monetary Fund (IMF) logo at its headquarters in Washington, D.C., U.S., November 24, 2024. REUTERS/Benoit Tessier/File Photo
LA PAZ, Sept 18 (Reuters) - Bolivian lawmakers approved an agreement on Friday that will allow the South American country to access $1.9 billion in financing from the International Monetary Fund (IMF), as the government of President Rodrigo Paz faces foreign currency shortages, fiscal deterioration and declining international reserves.
The agreement, approved by the lower house on Thursday and ratified by the Senate on Friday, greenlights a loan that is part of a 36-month program under the IMF's Extended Fund Facility (EFF) and would facilitate access to more than $5 billion in additional funds from institutions such as the World Bank, the Inter-American Development Bank (IDB) and other partners.
The move is seen as a cornerstone of Bolivia's effort to regain access to external financing. In return, the country must implement a stabilization program that includes reducing the fiscal deficit, enforcing greater monetary discipline, adopting a more flexible exchange rate regime, and carrying out reforms to boost productivity and improve the investment climate.
The program also seeks to limit monetary financing of the public deficit.
One of its most significant aspects concerns fuel policy, as it calls for the elimination of government subsidies, while the government maintains that spending cuts must be accompanied by protective mechanisms for the most vulnerable sectors.
Economy Minister Christian Morales defended the agreement before the legislature, noting that the government had inherited an economy with $3.17 billion in net international reserves, of which only $52 million consisted of liquid reserves.
The government projects that reserves will reach nearly $6 billion by the end of 2026, almost $8 billion in 2028—when the program concludes—and around $9.07 billion in 2031. It also plans to reduce the fiscal deficit from 9.1% of Gross Domestic Product (GDP) in 2026 to 6.4% in 2027 and 3.8% in 2028.
(Reporting by Daniel Ramos; Writing by Raul Cortes, Editing by Kylie Madry and Iñigo Alexander)
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