Bolivia’s government has completely eliminated its diesel subsidy after the Senate approved a $1.9 billion loan from the International Monetary Fund that calls for spending curbs. The government, which scaled back the subsidy in December and again last month, has now decided to set a single diesel price for all consumers based on international prices. The move follows IMF conditions tied to the loan approval, aiming to reduce fiscal strain and align fuel pricing with global markets.

Bolivia had previously maintained a long-standing diesel subsidy to shield consumers from price volatility, but mounting economic pressures necessitated the reform. The subsidy removal is expected to impact transportation and industrial costs across the country. Officials say the new pricing mechanism will ensure transparency and sustainability in energy spending.

The IMF loan is intended to support Bolivia’s economic stabilization program, which includes broader fiscal adjustments. Analysts warn the change may trigger short-term inflationary pressures but is critical for long-term macroeconomic stability. The decision reflects growing pressure on Latin American nations to phase out costly fuel subsidies amid rising debt and external financing conditions.