Diesel shock topples economy minister as Bolivia's adjustment plan fractures.

The decree raising diesel prices for large consumers to 18 bolivianos per liter — nearly tripling the subsidized price of 6.96 bolivianos — has unleashed the sharpest political and sectoral crisis Bolivia has faced under Rodrigo Paz's administration, culminating this week with the congressional censure and subsequent dismissal of Economy Minister José Gabriel Espinoza, a move that shakes the architecture of fiscal adjustment precisely when the country most needs institutional stability.

The Legislative Assembly approved the censure of Espinoza, and President Paz proceeded with his dismissal, appointing Óscar Mario Justiniano as interim minister. The speed with which the reshuffle was executed suggests the Executive sought to contain the political damage before its supporting legislative coalition fractured further. Justiniano, who immediately outlined what he called a "Productive Triangle" as an economic recovery framework, inherits a portfolio besieged on multiple fronts simultaneously: productive sectors on the warpath, a currency that has just undergone a historic transition toward exchange rate flexibility, and an economy that the central bank projects will contract 3.6% in 2026 — the most severe figure any Bolivian authority has publicly acknowledged in recent years.

The immediate epicenter is fuel. Supreme Decree 5676, which eliminated the diesel subsidy for large consumers and established a reference price calculated daily, is being rejected with unusual breadth across sectors. The Cámara Agropecuaria del Oriente declared an emergency. Fencomin — which represents mining cooperatives — is demanding its repeal. Producers, transporters, and miners converged on an ultimatum to the government. The 18-boliviano-per-liter figure hits the construction sector with particular severity, where contracts signed under the previous price now open financial holes that threaten to paralyze projects. For the agricultural sector, whose soybean industry has already slipped to fifth place globally due to a lack of biotechnology, the impact could not come at a worse moment.

What complicates the picture is that the tension is not simply between damaged sectors and a capricious government. Fundación Jubileo, an organization with independent technical credibility, justified the adjustment as necessary, pointing out that the subsidy had become a mechanism that encouraged smuggling — which, according to available data, grows at twice the pace of the formal economy — and distorted resource allocation. The organized industrial sector, through its chambers, rejected the blockades accompanying the protests and argued that the subsidy should not return. In other words, the formal business elite and technical bodies are on one side; transport unions, cooperative mining, and agriculture are on the other, with the government caught in between.

The exchange rate gap adds another layer of complexity. According to El Deber, the differential between the official rate — now around 9.73 bolivianos per dollar according to the BCB, and which closed Friday at 11.50 bolivianos on parallel market quotes — and freight negotiations between YPFB and tanker operators reaches a spread of between 6.96 and more than 11 bolivianos. That gap is the financial knot that tanker operators and the state oil company agreed to address through technical working groups after suspending a national strike that threatened to worsen shortages. Fuel lines have not disappeared; the outgoing minister could not give a date for their end.

Country risk, which according to El Deber reports has fallen from 2,000 to 407 points since the Paz government took office, is the signal the Executive prefers to display to markets. Together with the recently approved $1.9 billion IMF credit, the return of dollar deposits to savers, and the reopening of cards for international purchases at the reference exchange rate, the external financial profile has eased considerably compared to the previous government's currency crisis. The Economy Ministry also confirmed that the banking system has foreign currency available, and that 99.3% of loans are denominated in bolivianos, reducing the risk of currency mismatch amid the swings of the new flexible regime.

But there is a paradox that crystallizes today: the same week in which Bolivia celebrated 201 years of independence with an official discourse of "reconstruction," the BCB projects a GDP contraction, the Economy Ministry lost its head to censure, and six productive sectors issued simultaneous ultimatums. The business summit convened in Cochabamba is demanding a "rescue plan" rather than an adjustment plan, and accumulated losses from blockades so far this year in Cochabamba already exceed the total damage from all of 2025.

What to watch in the coming days is whether interim minister Justiniano can articulate that productive triangle with enough substance to demobilize sectors on the warpath, whether the government maintains Decree 5676 in its current form or modifies it to cushion the impact on agriculture and transport, and whether the technical working group between YPFB and tanker operators reaches a freight agreement that averts a new national strike. The most systemic risk is that political crisis consumes the credibility of the adjustment before it produces the results that justify its social cost.

**SOBOCE (not internationally listed)** — Bolivia's largest cement company publicly warned of the economic impact of a potential arbitration ruling against it, calling for effective judicial protection. The case has implications for the investment climate in the Bolivian industrial sector at a moment when the government is seeking to attract external capital through a new Investment Law sent to the Legislative Assembly.

**YPFB (state-owned, not listed)** — Bolivia's state oil company is negotiating a new freight structure with tanker operators following the elimination of the diesel subsidy, with a five-month accumulated debt that came close to triggering a national strike; both sides agreed to technical working groups, but the resolution remains open-ended. Managing the conflict is critical for fuel supply in a country that imports most of the diesel it consumes.