Bolivia's $1.9B IMF Deal: Fiscal Adjustment, Flexible FX, Fuel Subsidy Phase-Out

Bolivia has reached a $1.9 billion IMF agreement that mandates a strong fiscal adjustment, a flexible exchange rate, and the end of fuel subsidies by 2027, alongside new banking rules. The deal signals a major policy reversal for a government that had long resisted orthodox adjustment, and its implementation will test social stability and market confidence. The flexible dollar regime and subsidy removal are likely to trigger a sharp devaluation and higher inflation in the near term.