Bolivian cities grind to a halt as fuel-price hike triggers transportation strike
New government challenges protests as it ends subsidies and raises fuel costs, prompting fare increases and inflation concerns amid broader economic reforms.
LA PAZ, Bolivia — Public transportation in Bolivia's largest cities ground to a standstill Friday as drivers and other public-transport workers walked off the job in protest of a 100% fuel-price increase ordered by the newly installed government.
In La Paz and Santa Cruz, the nation’s two biggest urban hubs, streets were quiet as protests erupted, with demonstrators blocking street corners and transit systems closing down. Long lines formed at markets as residents prepared for higher costs, and marches continued through the day. Edson Valdez, a leader of the transportation union, described the decree as "the government has given the people the worst Christmas gift. Not only have transportation fares doubled, food prices are through the roof, they’ve risen again." Natalia Rodríguez, a homemaker, added that food and fuel prices were surging and that people were stockpiling basics in anticipation of more price hikes. The government said the measure would be paired with negotiations on public service rates, but insisted the price increase could not be reversed. "The decree will not be touched," Presidency Minister José Luis Lupo said. "It is not negotiable. It is a painful measure, but it must be done. We will negotiate public service rates, but there is no other way." The government delegated negotiations over urban fares to mayors, placing the onus on local officials to manage the immediate impact on commuters.
The protests arrived as Bolivia’s new administration under President Rodrigo Paz, a center-right politician, took office more than a month ago, ending two decades of leftist rule. Paz has framed the subsidy cut as a necessary step to stabilize an economy battered by inflation, a depleted reserve position and a dwindling fiscal buffer. "We inherited a country hurt in its economy, hurt in its reserves, without dollars, with rising inflation, without fuel and with a a ransacked state," Paz said, signaling the scale of the challenge ahead.
Lupo argued that the new measures mark the end of a populist cycle that encouraged waste and corruption and said the administration would focus on stabilizing the economy to foster growth. He stressed that lawmakers would oversee subsidy reforms and that social benefits would be preserved for the poorest sectors, including a 20% wage increase introduced by the government.
Economists and international observers note that the subsidies had kept fuel and transport prices artificially low for years, draining Bolivia's foreign currency reserves. The Ministry of Economy has projected that inflation will finish the year around 22%, with a fiscal deficit near 12.5% of gross domestic product. Officials argue that removing subsidies on gasoline and diesel could save about $3 billion annually, money they say will be redirected to investments that support growth and debt reduction. Bolivia imports roughly half of its gasoline and almost all of its diesel for domestic use, making the country particularly sensitive to price shocks and exchange-rate moves. The subsidy removal, critics warn, could further raise food production costs and consumer prices in the near term.
The administration has sought to temper the impact by preserving social bonuses for poor sectors and by pledging to shield vulnerable households from the full effects of price changes. The government has also pursued broader economic supports, including an initial $550 million loan from the CAF, the Andean Development Corporation, aimed at stabilizing the economy and paying down debt. A delegation of U.S. business leaders met with Paz on Thursday to discuss investment opportunities as part of a broader push to reassure markets and investors who watched the policy shift closely.
The legislative branch approved the CAF loan and signaled bipartisan backing for the broader stabilization plan. Yet the immediate reality on the streets suggests that the political price of the reforms could be steep if protests spread beyond La Paz and Santa Cruz. Edgardo Suárez, a political analyst, cautioned that even with official support for the plan, public tolerance for rising prices could wane if assurances on food and fuel provision prove insufficient.
Officials have warned that protests could spread nationwide in the coming days if subsidies are not restored or if alternative social protections fail to blunt the impact on households. For now, the country remains on edge as workers and residents weigh the tradeoffs between long-term stabilization and short-term hardship, with markets and families monitoring daily price movements that are likely to influence the trajectory of Bolivia's tough-but-necessary economic reforms.