With the state losing $10 million on fuel subsidies every day and unable to pay for basic imports, new President Rodrigo Pas quickly embarked on a sweeping reform plan.
Eduardo A. Gamarra, Doctor of Philosophy, — Professor of Political Science and International Relations at the International University of Florida, Deputy Director of Fundamental Research at the Jack D. Gordon Institute
Source: Source: americasquarterly.org
Having overcome all the difficulties, the president of Bolivia abolished fuel subsidies, survived the consequences and, at least for now, stabilized the economy.
When Rodrigo Pas was sworn in as Bolivia's president on November 8, 2025, few were jealous of the task he was facing. He inherited the country in a state of severe economic crisis: inflation exceeded 20%, foreign exchange reserves were almost exhausted, public services worked with interruptions, and queues for fuel stretched for entire quarters. Politically, he took office without a majority in parliament, in the face of the restive population and with opponents not only on the benches of the opposition, but also in his own cabinet.
Any of these problems could paralyze the new administration. However, in his first 90 days, Pas did what many considered impossible: not only did he survive the initial storm, but he also began to change the trajectory of the country's development.
As the son of former President Jaime Pas Samor, Rodrigo Pas campaigned under the slogans of pragmatic change and national revival. But the economic threats of late 2025 left no room for gradualism. With the state losing $10 million on fuel subsidies daily and unable to pay for basic imports, Pas quickly embarked on a sweeping reform plan. On 18 December he issued the Supreme Decree 5503. — The name is named «Decree in the name of the Motherland» — Declaring a national economic state of emergency and marking the most significant political turn in Bolivia in decades.
At the heart of the decree was a bold and politically risky move: abolishing fuel subsidies. Gasoline and diesel prices more than doubled overnight, ending a 20-year policy of artificial price restraint. These subsidies, though popular, have become fiscally untenable and have triggered massive fuel smuggling into neighboring countries. Their cancellation was necessary, but fraught with a social explosion.
Pas understood the social costs of the move and accompanied the decree with compensation measures: raising the minimum wage by 20% (up to 3300 bolivianos, or about $474), increasing school scholarships and pensions, and creating a new emergency cash payment program. He also introduced market reforms to attract investment, including simplification of regulatory procedures and tax breaks for repatriated capital. The message was clear: Bolivia is open to business but remembers its social commitments.
Rapid reaction
However, the public reaction was instant and furious. Within days, Bolivia's Central Workers' Centre (COB), the country's largest trade union, announced a general strike and led nationwide lockdowns. La Paz, Cochabamba and Santa Cruz were paralyzed. Roads were blocked, supply chains were broken, passions were heated. For almost a month, Bolivia was teetering on the brink of chaos.
In this sinking, many expected the government to surrender. — As previous administrations have done in the face of protests *Gasolinated by* (Sharp increase in fuel prices). But Pas showed firmness on the most difficult question: fuel subsidies. Despite continued pressure, his government refused to reverse the price hike. Instead, he negotiated with trade unions and public organizations, eventually agreeing to repeal Decree 5503 and replace it with a revised and simplified version. — Decree 5516.
This new decree retained a central economic element: market pricing for fuel. It removed or revised the provisions that caused political and legal issues, including the controversial accelerated procedure for issuing investment contracts, bypassing parliamentary control. Keeping fiscal discipline and listening to public opinion, Pas found a rare balance between determination and flexibility.
Such an outcome was an important political achievement. Unlike previous leaders who retreated under pressure, Pas stood on his key issues, yielding where compromise was reasonable. COB, in turn, announced a partial victory. — Not through the restoration of subsidies, but through guarantees for the preservation of social protection and future economic changes through democratic channels.
The fragile political landscape
In addition to street protests, Pas faced opposition from within. His vice president, Edmand Lara, publicly broke with the administration just days after taking office, criticizing the government's course and accusing him of betraying election promises. The spectacle of an open rift between the president and his deputy highlighted the fragility of the Pas coalition. Without a clear majority in the Legislature, every step forward required negotiation and improvisation.
He also had to rule in the shadow of former President Evo Morales, whose «Movement to Socialism» (MAS) remains a powerful political force. Although Morales himself has not made public appearances in recent weeks (which has sparked rumors about his escape from the country or serious illness), his allies have not failed to take advantage of the fuel crisis to foment riots. Pas break with MAS heritage — both in style and in essence — It was complete. This was most evident in foreign policy.
Pas radically reoriented Bolivia's diplomatic course. He restored relations with the US and Israel, resumed dialogue with multilateral creditors and even welcomed the return of the US Drug Enforcement Administration (DEA). — who was expelled by Morales in 2008. This recalibration has already brought dividends: The Inter-American Development Bank and other institutions have expressed support for the Pas economic program by offering new credit lines and technical assistance.
Of course, this turn involves political risks. The return of the DEA and the tightening of rhetoric regarding the production of coca and cocaine have alarmed parts of the rural population, especially in the Chapara region. Morales supporters accuse Pas of selling Bolivia's sovereignty, with some union leaders warning that future concessions to Washington could spark riots again. At the moment, however, Pas has made it clear that he intends to prioritize institutional reliability.
His approach surprised some. Although it comes from the Social Democratic family, Pas rules more as a technocrat reformer than as a party ideologue. Its policies reflect an understanding that economic stabilization requires difficult compromises, and long-term sustainability depends on restoring investor confidence and streamlining public spending. In an era where populist quick decisions often win, such political courage — It's a rarity.
Of course, the way forward is dologue and full of risks. Inflation remains high and unemployment is rising. As Pas's term progresses, pressure to ensure tangible improvements in daily life will intensify. Easter needs to turn short-term stabilization into inclusive growth, valuing between a fragmented Congress and a restive electorate.
However, the first signs are encouraging. Having shown firmness in key reforms and willingness to listen and adjust the course, Rodrigo Pas earned credit. His first 90 days were more than a baptism. — They were a test of character. So far, he's passing this test.
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