In Bolivia, fiction has ended, and that's a good thing.
By: Hugo Marcelo Balderrama - 28/09/2026
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In 2019, at a car dealership in my hometown of Cochabamba, a Spanish professor visiting for an academic exchange remarked to me, “You Bolivians are the richest people I’ve ever met; I’ve never seen you worry about the price of gasoline.” My response was, “It’s because we live in a fantasy fostered by fuel subsidies.” But the fuel subsidy was only a small part of a much worse illusion: the Community-Based Social Productive Economic Model (MESCP), imposed by Evo Morales and his Cuban backers since 2006.
The Productive Community Social Economic Model, despite its grandiose name, was nothing more than the hyperstimulation of Aggregate Demand through Public Spending, the largest in seven decades. The resources for this waste came from gas revenues. When that source collapsed in December 2014, they didn't hesitate to plunder the $15 billion in International Reserves, the $15 billion in private deposits in the financial sector, and the $10 billion in pension funds. To put it simply: to maintain the illusion of cheap fuel, they devoured the savings and the future of Bolivians.
Reality hit at the end of 2022, when the first lines for gasoline and diesel appeared. The Arce Catacora administration tried to downplay the situation; however, by 2024, it was impossible to hide: Bolivia was suffering an energy crisis. Almost simultaneously, the exchange rate reached Bs. 18, the main symptom of the national currency's devaluation. Therefore, the 2025 election campaign was dominated by these two issues.
In December 2025, under Rodrigo Paz's administration, fuel prices were adjusted to 6.96 bolivianos per liter for regular gasoline, 11 bolivianos for premium gasoline, and 9.80 bolivianos for diesel, among others, representing increases of 86% and 162%, respectively. However, the crisis in the Middle East, with Iran attacking the Strait of Hormuz and the Houthis attempting to seize the Strait of Tears, along with the war between Russia and Ukraine, exacerbated the global energy crisis, rendering last year's price adjustments insignificant.
Therefore, on Friday, September 18, 2026, Rodrigo Paz announced the end of the diesel subsidy; from that date forward, the price would be Bs. 18 per liter. Reactions were swift, ranging from the old political opportunists, including Tuto Quiroga and Samuel Doria Medina, to the highway robbers of the COB (Bolivian Workers' Center) and the gangs led by Evo Morales.
What are the good and bad points of the measure?
It's positive that there's an effort to reduce government waste. The negative aspect is Rodrigo Paz's rhetoric, as the president, in a desperate attempt to avoid losing popularity, offered to use the subsidy money for education, health, and social programs. This is completely irresponsible, since what needs to be done is to stop spending, period.
Is there anything we can learn from the disaster we are experiencing?
The idea of a welfare state is electorally profitable in the short term, but in the long term it condemns us to misery and poverty. Furthermore, if in countries like the United States and Germany it generated debt that, on average, reaches 110% of GDP, what makes you think it can work in fragile countries like Bolivia?
Frederic Bastiat, in the 19th century, said: "The state is that great fiction by virtue of which everyone seeks to live at the expense of everyone else." He also warned that this fiction would always end badly. Looking at the reality of Bolivia, we can only say: "How right he was!"
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