Fuel Shock and Political Cost | Ajuste de carburantes y costo político

By Eju.tv

The adjustment and its political bill: the cost Rodrigo Paz faces after the fuel hike

The increase in fuel prices and the easing of diesel controls open a front of social and economic pressure for the government. Analysts warn of inflationary impact and political wear, while the transport sector distances itself and demands compensation.

LA PAZ. El Presidente junto a sus ministros en el mensaje dirigido anoche a la nación.

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The economic measures announced on Tuesday night by President Rodrigo Paz—including the increase in fuel prices and the rise of the national minimum wage to Bs 3,300—have sparked a public debate among different sectors in recent hours. Some support the measures as necessary, while others warn about their impact on the economy of the most vulnerable sectors and on inflationary pressure.

Economists, former authorities, and social sectors have begun to warn that the adjustment, although defended as necessary by the Executive, will carry a high and difficult-to-manage political cost. From an economic standpoint, analyst Gonzalo Chávez pointed out that fuel price increases have a transversal effect on the economy, particularly on transportation, the logistics chain, and final food prices.

In his analysis, the economist warned that any fuel adjustment ends up being passed on to consumers, generates inflationary pressure, and deteriorates purchasing power, especially among urban and popular sectors. Chávez also stressed that without a clear compensation plan, the government is exposed to rapid erosion of credibility—one of the factors that threatens to undermine the 65% popularity it currently enjoys, according to a recent survey broadcast on a national television network.

A similar view was expressed by former Minister of Hydrocarbons Álvaro Ríos, who argued that the measure reflects accumulated fiscal tensions and the difficulty of sustaining the subsidy scheme in the current economic context. Ríos warned that beyond the technical rationale of the adjustment, the central problem is political, as the Executive assumes the cost of an unpopular decision in a fragile social scenario with little room for public tolerance.

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The Minister of Economy and Public Finance. Photo: Unitel

According to the former minister, the risk is that the fuel price increase becomes a trigger for social conflict if it is not accompanied by clear signals of state austerity and social dialogue. “We could not continue subsidizing hydrocarbons for the entire country while on top of that 20% or 25% goes across our borders. It’s tough, but it’s what has to be done,” he said, adding that while the wage increase and bonuses will act as a ‘cushion,’ the next step should be a new Hydrocarbons Law to attract investment.

The political impact began to be felt more strongly in the transport sector, the most sensitive to diesel and gasoline prices. Leaders of urban, interprovincial, and heavy transport federations expressed their rejection of the increase and warned that operating costs will rise immediately; therefore, they made it clear that they will evaluate fare adjustments and do not rule out mobilizations if the government does not propose compensation mechanisms or price controls.

“It has been a heavy blow to the popular sectors,” said Limberth Tancara, leader of the Free Transport Union of La Paz, referring to the elimination of fuel subsidies. “We have issued instructions for all our minibus operators that, from this moment, the fare within the municipality of La Paz is Bs 5. The trufi on long routes is Bs 6.50,” he said. The measure will be replicated by other transport unions across the country.

La Paz drivers announce fare increases. Photo: screenshot Red Uno

However, Economy Minister José Gabriel Espinoza said the government has taken measures to reduce transport operators’ operating costs, including the elimination of tariffs and levies on the import of tires, lubricants, and spare parts. In his view, the cost structure of passenger transport is not limited solely to fuel. “The government is absolutely open to dialogue; we will set up dialogue tables with different sectors,” he said, although he warned that it will not allow transport operators to take advantage of the situation to raise fares unjustifiably.

On the political front, opposition figures agreed that the announcement directly hits the image of President Rodrigo Paz, who had maintained a discourse of economic stability and protection of household budgets. For several analysts, the Executive now faces the challenge of explaining why the adjustment is inevitable and how to prevent its effects from falling disproportionately on the most vulnerable sectors.

Hydrocarbons expert Francesco Zaratti said that the Rodrigo Paz government had no alternative but to assume the partial elimination of subsidies; however, he estimated that the government must “flood” the domestic market with diesel to show that the measure works. He noted that the fiscal deficit was “unsustainable,” especially when combined with the lack of international reserves and dollars to purchase imported fuels (90% of diesel and 55% of gasoline). “Maintaining supply was becoming increasingly onerous,” he said.

Samuel Doria Medina, leader of the Unidad alliance, defended the removal of hydrocarbon subsidies and said it was a necessary measure to confront the disaster left by the government of the Movement for Socialism (MAS), comparable to cancer. “They left us such a terrible economic disaster that it is comparable to cancer; therefore, the solution also has to be radical and equivalent to chemotherapy. I have undergone chemotherapy; it is complex, but it ensures that after some time you return to normal life. That is what has been done with these measures,” he said.

Former Senate president and former minister Óscar Ortiz said the decisions taken by the government are necessary and that fuel subsidies were “unsustainable.” “Here we are all going to have to make sacrifices. If prices are not raised, we won’t be able to supply ourselves. Today we do not have the necessary dollars to guarantee gasoline and diesel subsidies,” Ortiz said. “The new measures adopted by the government were necessary. The announcements are positive; however, the heart of the measures is fuel prices,” he added.

For his part, the president of the Santa Cruz Chamber of Industry, Commerce, Services, and Tourism (Cainco), Jean Pierre Antelo, questioned the increase in the national minimum wage set by the government for 2026 as part of the anti-crisis package. “The announced minimum wage, however, repeats schemes that have already shown their limits, as it did not arise from tripartite dialogue among workers, the private sector, and the State,” he said in a post on his X account.

The debate is no longer focused solely on the economic viability of the measures, but on their political sustainability. The fuel price increase places the government before a colossal challenge: it must show that the measures were taken to contain the deficit and bring order to public finances; otherwise, it will face an escalation of social pressure that could erode its political capital. The outcome will depend largely on the Executive’s ability to demonstrate that the adjustment will not, once again, be paid for by the citizenry.

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