Bolivia Ends Diesel Subsidy for Large Consumers as YPFB Admits Crisis

Bolivia · ECONOMY

YPFB says it cannot carry the fuel price gap alone, while the government rolls out a FONPLATA-financed paving program targeting some 73,000 jobs.

Bolivia’s state energy company YPFB has acknowledged a ‘structural’ crisis in the country’s hydrocarbons sector, days after the government ended the Bolivia fuel subsidy for large consumers and roughly doubled what they pay. President Rodrigo Paz, meanwhile, launched a US$92.7 million emergency employment program built around municipal paving works.

YPFB Admits Structural Crisis in Fuel Finances

Sebastián Daroca, the president of Bolivia’s state energy company YPFB, acknowledged a ‘structural’ crisis affecting the hydrocarbons industry in remarks reported on 18 August 2026. He said the gap between international and domestic fuel prices has become a financial imbalance that YPFB cannot sustain on its own.

Daroca confirmed that the Treasury has been injecting funds to support the company for about three weeks. That support has been covering, in practice, the difference between what YPFB pays for fuel abroad and what it charges consumers at the pump inside Bolivia.

The roots of the crisis run deep. Bolivia now produces about 22,000 barrels per day of liquid hydrocarbons, down from some 63,000 in 2015, according to Fundación Jubileo, while the country’s refineries are running at roughly 30 percent of capacity. Around 60 percent of the diesel and gasoline consumed is imported, and Bolivia spent about 980 million euros on fuel imports in the first half of 2026, América Económica reported. Daroca said the Treasury support has allowed YPFB to contract the fuel needed to cover forecast demand, with gasoline supply expected to normalise first, and the company has signed a contract to import one million barrels of crude to feed its refineries.

The framing matters. By calling the crisis structural rather than temporary, the YPFB chief signalled that the problem is built into the design of the Bolivia fuel subsidy system and will not disappear with a change in market prices or a short-term injection of cash.

For the government of President Rodrigo Paz, the admission sharpens a dilemma it has tried to manage quietly: how to shield consumers and small producers from world fuel prices without draining the public accounts on which YPFB depends.

Decree 5676 Ends Diesel Subsidy for Large Consumers

The concrete policy step behind the turmoil is Decreto Supremo 5676, issued on 17 August 2026. The decree ended the diesel subsidy for large consumers, the deepest change to the Bolivia fuel subsidy framework under the Paz government.

For large consumers, the effect was immediate and sharp. The price they pay for diesel roughly doubled, from about US$0.85 per liter to about US$1.56 per liter, according to reporting by the Associated Press.

The decree deliberately carved out smaller users. Subsidised diesel is maintained for direct users of between 120 and 5,000 liters per month, a band that covers small producers who rely on diesel for farm machinery, transport and small-scale industry.

The result is a two-tier market. Large consumers now pay a price far closer to international levels, while small producers retain access to cheaper fuel within the monthly allowance, softening the blow for the rural economy.

The decree sets an initial reference price of 18 bolivianos per liter for large consumers, up from the subsidised 9.80 bolivianos that other users continue to pay. Official arguments describe the target group as agroindustrial and mining users with monthly needs of between 20,000 and 120,000 liters. The change has met resistance: campesino organisations have threatened road blockades if the increase is not reversed, arguing that tight monthly quotas leave too little fuel for machinery during long working days.

Paz Launches Phase II of BOL-38 Jobs Program

Against that difficult backdrop, President Paz launched Phase II of the Programa Nacional de Emergencia para la Generación de Empleo, better known by its code BOL-38, over 24-25 August 2026. President Paz called the launch a historic moment for paving in Bolivia, noting that the investment, together with municipal counterpart funds, totals more than one billion bolivianos.

The new phase carries financing of US$92,710,280 from FONPLATA, the Latin American development bank, and is executed by FPS, Bolivia’s social investment fund, which will channel the money to local projects.

The funds are earmarked for paving works known locally as enlosetado, in which stone or concrete blocks are laid over urban and rural streets. The projects are designed and run by municipalities rather than by the central government.

That municipal design is meant to spread the work across the country and to let local governments choose the streets and neighbourhoods where jobs and paving are most needed.

The call is open to municipal governments and indigenous autonomous governments rather than to individuals seeking work, with jobs to follow from the projects selected. Projects that improve access to health centres, schools, sports areas, markets and main urban roads will be prioritised, and applicants must show basic services such as water and sewerage alongside the backing of neighbourhood councils. The financing comes from a FONPLATA loan authorised in 2024, and the government expects the works to activate micro, small and medium enterprises supplying paving stones and construction materials.

Program Targets 73,000 Jobs and 1.2 Million Square Metres of Paving

Phase II targets 18,000 direct jobs and 55,000 indirect jobs, around 73,000 positions in total. The government says hiring will prioritise women and young people, groups it has placed at the centre of its employment policy.

The works are expected to pave about 1.2 million square metres of urban and rural streets, a figure the government cites as evidence of the program’s physical as well as social reach.

Each municipal project is capped at Bs3 million (about US$431,000), a ceiling designed to spread the financing across many local governments instead of concentrating it in a handful of large contracts.

Municipalities have until 14 September 2026 to submit their applications. The rollout lands in the same weeks as the Bolivia fuel subsidy overhaul, making late August a defining stretch for the government’s economic agenda.

Subsidy Savings and Jobs Spending Shape Paz Agenda

The two announcements arrived within days of each other and together sketch the government’s economic playbook for the remainder of 2026.

On one side, the state is spending less to hold down fuel prices for its biggest consumers, while keeping protection in place for small producers within the monthly band of 120 to 5,000 liters.

On the other, it is spending more on employment, using borrowed funds from FONPLATA to finance municipal paving that creates jobs quickly and visibly in cities and towns.

Whether the Bolivia fuel subsidy savings prove large enough to steady YPFB, and whether BOL-38 delivers its promised 73,000 jobs, will define the early economic record of the Paz presidency.

Frequently Asked Questions

Sources

• americaeconomica.com
• larazon.bo
• produccion.gob.bo

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error