Bolivia Congress Passes Paz’s First Budget With a Smaller Deficit
Politics
Key Facts
—The vote. Bolivia’s lower house passed President Paz’s reworked 2026 budget on Saturday, July 4, after hours of debate.
—The goal. Officials say the plan cuts the fiscal deficit toward nine percent of output, down from a much higher base.
—The incentives. It waives import duties and value-added tax for five years on equipment for key productive sectors.
—The restraint. The revised text trims planned central-government salaries by about 976 million bolivianos.
—The next step. The bill now goes to the Senate for review before it can be signed into law.
—The backdrop. Bolivia is in recession, short of dollars, and running low on foreign reserves.
Bolivia’s new government has just passed a crucial test. The country’s lower house approved President Rodrigo Paz’s reworked Bolivia budget for 2026, a plan built to shrink a wide deficit while trying to bring production back to life.
According to Bolivian outlets La Razon and La Patria, the Chamber of Deputies passed the revised spending law on Saturday, July 4. The vote followed more than five hours of debate, and the bill now moves to the Senate before the president can sign it.
The approval matters because the budget is Paz’s first full fiscal blueprint. Getting it through a fragmented Congress, where he lacks a majority, was far from guaranteed, and his economy minister called the vote the fruit of talks between rival blocs.
What the Bolivia budget sets out to do
The headline aim is discipline. Economy Minister Jose Gabriel Espinoza said the reworked plan targets a fiscal deficit of about nine percent of the economy, a sharp cut from the much larger gap inherited from the previous government.
A fiscal deficit is simply the shortfall when a state spends more than it collects, covered by borrowing. Bolivia’s had grown as the commodity boom faded, so narrowing it is central to restoring the trust of lenders.
To that end, the revised text trims planned central-government wage spending by roughly 976 million bolivianos. It also bars the budget from being used to rubber-stamp past financial acts, a nod to the transparency Paz has promised.
Incentives to restart production
The other half of the plan is a push to revive the private economy. The budget waives import duties and value-added tax for five years on inputs, seeds, drones, tools, capital goods and industrial plant for the farming, industry, construction, transport and mining sectors.
The logic is to lower the cost of investment and let key sectors bring in technology cheaply. It extends an approach Paz began by decree, and echoes an earlier tariff cut this year that Bolivia used to ease the squeeze on importers.
There is also money for public universities, with an increase of about 410 million bolivianos, most of it for salaries and the rest for research. This mix of cuts and targeted spending is what let different blocs back the text.
A budget passed in a fragile economy
The setting makes the vote important. Bolivia is in its first recession in four decades, its foreign-currency reserves are thin, and a shortage of dollars has fed fuel queues and road blockades over the past year.
Against that, the government has been rebuilding trust. It placed a one-billion-dollar bond in May and secured billions in multilateral financing, and a ratified budget shows the new administration can move its agenda through Congress.
The caution is that a target is not an outcome. Independent forecasters, including the International Monetary Fund, have been more pessimistic than the government on growth and inflation, so the nine percent goal will be judged on delivery.
Why it matters beyond Bolivia
For a foreign reader, the vote shows whether Paz’s stabilization plan can survive a divided legislature. The budget was the clearest near-term test of that, and it cleared its first chamber.
The next signals to watch are the Senate vote and whether the deficit target holds as the year unfolds. Neighbours, lenders and investors in Bolivia’s gas and lithium will read the outcome closely for what it says about the country’s direction.
What did Bolivia’s Congress approve?
The Chamber of Deputies passed President Paz’s reworked 2026 budget on July 4, after more than five hours of debate, and sent it to the Senate. It targets a fiscal deficit of about nine percent of output and adds tax breaks for productive sectors.
What incentives does the Bolivia budget include?
It waives import duties and value-added tax for five years on inputs, seeds, drones, tools, capital goods and industrial plant. This covers the farming, industry, construction, transport and mining sectors, aiming to lower investment costs and bring in technology.
Why is this budget important?
It is the first full budget of the Paz government, passed in a Congress where he lacks a majority, while Bolivia is in recession with scarce dollars. Approving it signals the administration can move its stabilization agenda through a divided legislature.
More: Bolivia news in English, every day from The Rio Times.
Frequently Asked Questions
When did Bolivia's lower house pass the 2026 budget, and what happens next?
Bolivia's Chamber of Deputies passed President Paz's reworked 2026 budget on Saturday, July 4, after more than five hours of debate. The bill now moves to the Senate for review before the president can sign it into law.
What are the key financial targets and incentives in the 2026 Bolivia budget?
The plan aims to cut the fiscal deficit toward nine percent of output, down from a much higher base. It also waives import duties and value-added tax for five years on equipment for key sectors, while trimming planned central-government salaries by about 976 million bolivianos.
Why was passing this budget a big win for President Paz?
The budget is Paz's first full fiscal blueprint, and passing it through a fragmented Congress where he lacks a majority was far from guaranteed. His economy minister called the vote the result of talks between rival blocs, making it a crucial early test of his new government.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.
Read More from The Rio Times