Bolivian President Rodrigo Paz has signed into law a $1.9bn International Monetary Fund lending programme, according to the Official Gazette, days after lifting the diesel subsidy at the heart of the deal and as unions and former president Evo Morales threaten opposition.

Law 1765, which authorises the financing, was published over the weekend without further announcement and takes effect under Bolivian rules. The IMF Executive Board must still approve the programme before funds are disbursed.

Congress cleared the deal on September 18. Paz then announced at midnight the end of diesel subsidies, so fuel will be priced at international market levels. The price per litre rose to BOB17.95 ($1.83) from BOB9.80 ($1). Petrol remains subsidised for now, though support has already been trimmed.

The government has committed to the Washington-based lender to eliminate all fuel subsidies from 2027, according to a technical agreement reached in July and published last week.

The programme provides 1.369bn Special Drawing Rights, equivalent to $1.9bn, to tackle what the agreement calls "persistent" fiscal and external imbalances. Repayment runs up to 10 years from each disbursement, with amortisation starting after four years and six months. The interest rate is 3.47% and may move with the SDR exchange rate. Disbursements can be made over up to 36 months.

The law says the funds aim to support the economic reform programme and rebuild international reserves. It cites persistent fiscal deficits, falling hydrocarbon revenue, dwindling reserves, inflationary pressure and difficulty accessing foreign currency. It says the adjustment will be gradual and combine deficit reduction with measures to protect vulnerable groups and strengthen social safety nets, according to El Diario. It also states that IMF financing does not replace decisions by the Bolivian state on economic policy.

Officials expect the deal to unlock about $5bn in further financing from the World Bank and other lenders. It is Bolivia's first multi-year IMF arrangement since 2006.

Paz's Christian Democratic Party lacks a majority, but centrist and right-wing lawmakers who dominate Congress backed the agreement. The leftist Movement Towards Socialism (MAS) holds two of 130 lower house seats and none in the Senate.

Morales called the agreement unconstitutional and treasonous, citing Article 320 of the constitution, which bars foreign economic impositions. He also accused the government of seeking to amend the constitution under the pretext of removing subsidies and attracting investment in order to privatise natural resources, and objected to the possible closure of ten state-owned companies.

The Bolivian Workers' Centre, the main union federation, says subsidy cuts will raise living costs for struggling families. Road blockades in June and July paralysed much of the country as protesters demanded Paz's resignation. Congress last week extended a state of emergency for another 90 days.

Paz travelled to the United States over the weekend for the UN General Assembly and to meet institutions involved in the economic plan, presidential spokesman José Luis Gálvez told state channel Bolivia TV.

Bolivia's natural gas output has fallen after years of underinvestment, depriving it of dollars needed to import fuel. The Iran war has pushed up global fuel costs, adding to pressure on public finances.

Paz took office in November 2025, ending two decades of hard-leftist rule under MAS, and moved quickly to cut fuel subsidies. The austerity measures triggered weeks of protests, led largely by highland Indigenous and rural workers' groups loyal to ex-president Morales, who blocked key roads and demanded his resignation. By mid-June the barricades had isolated La Paz, emptied supermarket shelves and left hospitals short of oxygen.

Paz declared a 90-day state of emergency on June 20, banning blockades and authorising the military to support police in reopening roads. "This is not a state of emergency to restrict people's lives. It is a state of emergency to give people back their freedom," he said. Congress extended it for another 90 days last week.