The International Monetary Fund and Bolivia reached a staff-level agreement on July 29 for a 36-month, $1.9bn loan programme designed to help the South American nation restore macroeconomic stability and rebuild depleted foreign reserves, the fund said, a deal that still requires approval from the IMF's Executive Board.

The financing is contingent on Bolivia implementing a set of agreed prior actions before the board can consider the arrangement, the IMF said in a statement.

The programme is expected to help unlock additional lending from the World Bank, the Inter-American Development Bank and other development partners, forming part of a broader financing package worth more than $5bn over the life of the arrangement, the fund added.

An IMF team led by Joana Pereira held discussions with Bolivian officials in the country and in Washington between May and July. Pereira said Bolivia had been grappling with entrenched fiscal deficits, falling natural gas output, shrinking reserves, high inflation and distortions in currency and product markets, all of which had squeezed economic activity and eroded household incomes.

"The new administration has launched a decisive reform plan to address these challenges and restore macroeconomic stability," Pereira said, adding that the fund-backed programme was intended to rebuild resilience and put the economy on a "job-rich and sustainable growth path."

The agreement caps months of negotiations under centrist President Rodrigo Paz, who took office late last year pledging to overhaul an economy left short of dollars by years of fiscal spending and a fixed exchange rate. His government, which ended two decades of socialist rule under the hard-left MAS party, first confirmed it was pursuing IMF assistance in May, when Finance Minister José Gabriel Espinoza said Bolivia was seeking a financing-and-reform package of up to $3.3bn, reversing an earlier denial of talks. Paz said on July 23 that terms had "already been assumed" and pointed to an expected IMF credit of $2bn to $2.5bn within a wider $5bn support package, figures that came in above the loan amount now agreed with fund staff.

Bolivia had been facing $2.3bn in external debt repayments falling due this year, against a backdrop of collapsing natural gas export revenue, which dropped to just under $1.2bn in 2025, one of the weakest years on record for the sector. The government had already secured close to $8bn in multilateral financing since taking office, including $3bn from the Development Bank of Latin America and the Caribbean (CAF) and $4.5bn from the Inter-American Development Bank.

Some economists had argued Bolivia should have approached the Fund sooner. According to El Diario, Ernesto Bernal, a professor at the Technical University of Oruro, said the country had lost six months in tackling its crisis by delaying the request. Analyst Gonzalo Chávez said IMF financing, layered on top of Bolivia's existing multilateral borrowing, could push total external support toward the $10bn-$12bn range that economists regard as necessary for stabilisation. Separately, economist Horacio Villegas had put Bolivia's total borrowing commitments under Paz at around $11bn within six months of taking office, warning that annual inflation, running near 17%, combined with IMF-linked policy conditions, risked clashing with the country's traditional approach to managing its natural resources, Sputnik reported.

Presidency Minister José Luis Lupo had said the previous week that a Fund arrangement would be essential to closing Bolivia's fiscal deficit and unifying its exchange rate, though not the government's only tool for stabilising the economy. He said the conditions likely to accompany any deal - lower deficit spending, a unified currency regime and an appropriate interest rate policy - mirrored steps the government had already set for itself.

Bolivia unified its multiple exchange rates in June, letting the official rate rise by roughly 40% from BOB6.96 to near BOB10 per dollar, a move economists linked to efforts to satisfy IMF preconditions. Speaking to El Diario, Economist Ramiro Cavero said the shift largely recognised a reality the parallel market had already priced in for months, but warned the reform would quickly lose credibility if banks could not guarantee dollar availability at the new official rate.

The IMF said the reform programme centres on five pillars: putting public debt on a firmer downward path through spending discipline and revenue mobilisation; expanding social protection to shield poorer households from the effects of fiscal consolidation; modernising monetary policy and moving toward a market-based exchange rate as a step toward eventual inflation targeting; strengthening bank supervision, resolution and anti-money laundering frameworks; and improving governance, public procurement and the business climate to attract private investment.

The deal follows weeks of unrest earlier this year, when protesters, many of whom supporters of former hard-left president Evo Morales, blockaded roads for 48 days demanding Paz's resignation and triggering a national humanitarian crisis. The blockades were cleared by the army after Paz declared a 90-day state of emergency in late June. The Central Obrera Boliviana, the country's main labour federation, had listed the government's pursuit of IMF financing – which Paz had pledged during his campaign to avoid – among its formal grievances.

The staff-level agreement now goes to the IMF Executive Board for discussion and final approval, a process that typically follows the completion of prior actions by the borrowing country.