Bolivia: MAS Split, Dollar Shortage, Lithium Deals — 2026-10-11
Bolivia faces a critical test of stability as President Rodrigo Paz accuses Evo Morales’s supporters of inciting confrontation ahead of threatened road blockades starting October 13. While the central bank absorbs liquidity shocks from a recent 83% diesel price hike and the IMF disburses its first $211 million tranche, political unrest is casting a shadow over the nation's strategic lithium assets.
Bolivia: MAS Split, Dollar Shortage, Lithium Deals — 2026-10-11
Top developments
Paz Accuses Morales Faction of Inciting Confrontation
On October 11, President Rodrigo Paz publicly condemned the mobilizations led by former President Evo Morales, accusing them of seeking "confrontation" and illegal road blockades. This rhetoric comes just two days before Morales has threatened to launch protests starting October 13, demanding the repeal of the decree that removed diesel subsidies. The government maintains that Morales is wanted on an arrest warrant, creating a high-stakes standoff between the executive branch and the MAS party's "Evista" wing.
IMF Disburses First Tranche Amid Dollar Shortage
The International Monetary Fund released its first disbursement of $211.3 million to Bolivia on October 6, aiming to bolster international reserves amidst a severe dollar shortage. This initial payment is part of a broader $1.9 billion loan agreement intended to stabilize the economy following the currency float and subsidy cuts. The central bank has stated it will continue to manage liquidity to prevent excessive volatility in the parallel dollar market, which has seen significant pressure since the reforms began.
Police Receive US Riot Gear Ahead of Blockades
On Friday, October 9, Bolivian police received shipments of US-supplied riot gear and tear gas as security forces prepared for potential unrest. The delivery coincides with Morales’s ultimatum for protests beginning October 13, raising concerns about violent clashes in La Paz and other key cities. Government officials have emphasized that "no one is above the law," signaling a hardline stance against unauthorized blockades that could paralyze the country's logistics.
Lithium Assets at Risk Due to Political Unrest
International mining analysts warn that ongoing political instability in Bolivia threatens the development of world-class lithium assets, particularly those associated with state-owned YLB and international partners like Russia’s Uranium One Group and China’s CBC. With the country producing less than 1% of global lithium supply despite holding 20% of known deposits, continued unrest and policy uncertainty are delaying critical infrastructure projects. Investors are watching closely as the Paz administration attempts to pivot toward market-friendly policies while managing the social fallout of economic reforms.
Local view
Local media outlets are intensifying coverage of the divide between the government and the "Evista" faction of the MAS party. Infobae reports that Defense Minister Ernesto Justiniano has explicitly warned Morales that the state will enforce arrest warrants if he participates in illegal activities, rejecting claims of political persecution. Meanwhile, local economists are analyzing the impact of the recent fuel price hikes, noting that while the diesel subsidy has been removed, petrol subsidies will remain until January 2027, creating a complex transition period for consumers.
Context & numbers
- Diesel Price Hike: The removal of the diesel subsidy resulted in an 83% increase in pump prices on September 19, raising the cost from Bs 9.80 to Bs 17.95 per liter.
- Inflation Forecast: The Central Bank of Bolivia maintained its year-end inflation forecast at 9.2% despite the recent energy price adjustments.
- Reserves Composition: Only 12.2% of Bolivia's accumulated reserves are liquid, with gold holdings reaching 25.3 tons, highlighting the fragility of the current monetary position.
- Subsidy Costs: Fuel subsidies accounted for 2.9% of GDP in 2026, down from 6.2% in 2025, with the government targeting 0% by 2027 under the IMF program.
On the radar
- October 13 Protests: Morales supporters are scheduled to begin road blockades on Monday, October 13, which could severely disrupt supply chains and tourism.
- Petrol Subsidy Review: The government has indicated that petrol subsidies will be reviewed in January 2027, with a potential full removal aligned with international prices.
- Lithium Contract Approvals: The Legislative Assembly (ALP) continues to deliberate on contracts for the industrialization of lithium, with delays impacting timelines for the construction of production plants in Uyuni.
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