IMF Negotiations Collapse as Bolivia's New Finance Minister Inherits Political Chaos

The fall of José Gabriel Espinoza —censured by the Legislative Assembly and dismissed within a matter of days— now makes Bolivia's economic governance crisis the dominant story, one that jeopardizes the continuity of negotiations with the IMF and the World Bank at the most delicate moment of the stabilization effort.

Christian Morales Burgos was sworn in today as the new Minister of Economy and Public Finance, following a sequence of events that laid bare just how fragile is the political equilibrium underpinning President Rodrigo Paz's adjustment program. Espinoza, whose stewardship had been praised by Bloomberg Línea as the architect of positive growth projected for 2026, failed to appear at his parliamentary interpellation, citing a trip to Santa Cruz and Brazil. The Assembly rejected that justification, proceeded with censure, and the Executive, unable to withstand legislative pressure, dismissed him. Morales, until then Vice Minister of the Treasury, arrives with an explicit mandate from President Paz to continue negotiations with multilateral bodies —the IMF and the World Bank— without deviation. His first public statement was unequivocal on that point: "We will continue with the measures that have been implemented."

The question that immediately takes hold among analysts and creditors is whether that continuity is credible. Espinoza's dismissal comes as the Central Bank projects a GDP contraction of 3.6% for 2026, while international rating agencies are already eyeing with concern Bolivia's capacity to accumulate international reserves. The dollar, which closed the week at Bs 11.50 in the official market following the liberalization of the fixed exchange rate regime that had prevailed for fifteen years, reflects a boliviano depreciation of roughly 25% in just five weeks, according to Los Tiempos. That speed of exchange-rate adjustment, while it reflects the correction of an imbalance built up over years of unsustainable subsidies, is hitting production costs hard across virtually every sector.

The epicenter of social tension is Supreme Decree 5676, which raised the diesel price to Bs 18 for large consumers. The measure, which YPFB justifies as necessary given the unsustainability of the subsidy and which the Fundación Jubileo has endorsed on technical grounds, has triggered a chain reaction: the Cámara Agropecuaria del Oriente has declared a state of emergency, the Federación Nacional de Cooperativas Mineras is demanding its repeal, the Asociación Nacional de Productores de Oleaginosas rejects the decree, and tanker truck operators have announced a national strike starting Monday over five months of unpaid receivables. Ten productive sectors have called protests that defy even the state of emergency in force, and the blockades recorded in previous weeks have already accumulated estimated losses of USD 2.7 billion with fourteen dead, according to Los Tiempos. The poultry sector alone reports damages exceeding USD 400 million.

In parallel, Hydrocarbons Minister Marco Blanco survived his own parliamentary interpellation —the Assembly did not censure him— but at the hearing he openly acknowledged the existence of what he called an "entrenched mafia" within YPFB and the Agencia Nacional de Hidrocarburos, pointing to those structures as responsible for the fuel shortages. Blanco also announced the dissolution of the ANH and the creation of a new regulatory entity. Meanwhile, the Servicio Departamental de Caminos of Cochabamba warned that it could paralyze its five field offices for lack of fuel, directly threatening the execution of infrastructure works underway. Construction as a sector faces an additional problem: diesel at Bs 18 blows a hole in contracts signed under subsidized prices, with the risk of halting works due to breaches of financial equations that no longer hold up.

Against the backdrop of this political and social upheaval, the mining boom remains the only robust export engine: gold and silver account for the growth in export value, though Bolivia is investing less and less in exploration, which compromises medium-term sustainability. Taxation on gold remains minimal, as the Fundación Jubileo has documented. The government has sent an Investment Law bill to Parliament that still has no scheduled date for committee review, and President Paz will in the coming days inaugurate the drilling of the Junín-9D well as a signal of reactivation in the hydrocarbons sector.

What investors and multilateral counterparties should watch in the days ahead is twofold: first, whether Morales manages to preserve the reform agenda without Congress opening another interpellation front against him, and second, whether the pushback against DS 5676 escalates to the point of forcing a reversal that would blow up the program's fiscal credibility. A retreat on fuel pricing policy would be read as a signal that Bolivia cannot sustain the structural adjustment that its multilateral creditors consider a sine qua non for disbursing the committed resources.

**SOBOCE (no international listing)** — Bolivia's leading cement producer publicly warned about the economic impact of the possible enforcement of an arbitration ruling against it, invoking its right to effective judicial protection; the company, whose contracts are denominated in bolivianos, also faces the impact of costlier diesel on its production and transportation costs. The combination of legal risk and energy cost pressure represents a material threat to its operating margins in an environment of contracting construction activity.