Bolivia Ends 20 Years of Cheap Diesel: What the 83% Price Rise Means for Expats

BOLIVIA · ECONOMY & FUEL POLICY

After more than two decades of some of the cheapest diesel in the Americas, Bolivia has let the price jump by about 83% overnight — from Bs9.80 (about US$0.89) to Bs17.95 (about US$1.63) a litre. For expats the direct hit is modest; the indirect effects, through bus fares and food prices, are not yet quantified. Here is what Supreme Decree 5716 actually does, why the government moved now, and what to watch in the coming days.

What Supreme Decree 5716 Does

The decree, approved on Friday 18 September and in force from Saturday 19 September, sets the retail diesel price at Bs17.95 per litre including VAT, up from Bs9.80 — a rise of about 83%. It repeals Supreme Decree 5676 of 16 August and Supreme Decree 5698 of 1 September, the two stop-gap measures of the past five weeks.

Instead of a fixed price, DS 5716 ties diesel to the Argus ULSD Colonial 62 international reference, within a band of plus or minus 5%. The reference price is calculated on business days, and the ministry responsible has five working days to publish the regulation governing the band. In practice this means the pump price can now move in both directions — down as well as up — rather than sitting frozen for years, as it did under the subsidy regime.

The decree also sets a 0% import tariff on certain gasoline imports until 31 December 2027 and extends a flex-fuel incentive to 30 April 2030 — both aimed at private-sector supply, which the subsidy system had crowded out.

Why Now — the Dollar Shortage and the IMF

Bolivia’s fuel subsidies cost the state around US$55 million a week, paid for with dollars the central bank increasingly does not have. The country’s foreign-exchange shortage has made imported fuel — most of what Bolivia consumes — a direct drain on reserves.

The timing is not accidental. The decree came hours after the Senate approved a US$1.9 billion credit from the IMF on Friday (the Chamber of Deputies had approved it on Thursday). Officials say they expect the IMF board to vote on 2 October; treat that date as an expectation, not a confirmed schedule. Fuel-subsidy reform is exactly the kind of fiscal signal an IMF program looks for, and the government has framed the decree as part of stabilizing public finances.

What It Means for Expats

The direct cost is easy to price: a 40-litre tank that cost Bs392 (about US$36) now costs Bs718, about US$65. For expats who drive, that is the whole change for now.

The indirect effects are the real story, and they are honestly unknown at the time of writing. Diesel moves Bolivia’s buses, trucks and farm machinery, so transport unions and food supply chains will feel the increase first. Transport unions had not announced fare changes as of Sunday; any verified figures will matter more than predictions. If you budget in bolivianos, watch bus fares and market prices over the next two weeks rather than assuming the worst on day one.

One structural point in the other direction: because the price now follows an international reference with a 5% band, it can also fall. The era of a price that only goes up by decree is, in principle, over.

The Background — Twenty Years of Cheap Fuel

Bolivia’s fuel subsidies date back more than two decades and were a pillar of the economic model built under the MAS governments. They kept diesel among the cheapest in the Americas, but at the cost of ballooning fiscal spending, smuggling to neighbouring countries, and a refining and import structure dependent on state dollars.

President Rodrigo Paz won the runoff of 19 October 2025 with 54.5% of the vote and took office on 8 November 2025, promising to phase out the subsidy era. The first cuts came in December 2025; the August and September decrees now repealed were interim steps. DS 5716 is the first measure that replaces the fixed-price system with a market-referenced band rather than simply raising the frozen number.

What Comes Next

Three things to watch: the ministry’s band regulation, due within five working days of the decree; the first daily recalculations of the reference price, which will show whether the band actually moves; and the expected IMF board vote around 2 October. Locally, the open question is transport fares — the first union announcements, if any, will set the tone for how the increase lands. The regional picture is in our daily guide for Sunday 20 September.

More: Latin America news in English, every day from The Rio Times. See also our daily guide for Sunday 20 September.

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