Bolivia: Rodrigo Paz faces overlapping institutional and social risks

Version 2.0 of Dossier Nº 001 tracks a shift from a single implementation risk to overlapping institutional and social risks.

Bolivia’s political-risk picture has changed materially since the previous 19 September update. President Rodrigo Paz still shows meaningful decision-making and bargaining capacity: the roughly USD 1.9 billion IMF-related financing cleared Bolivia’s legislative hurdle, the official exchange rate eased to Bs 12.00 per US dollar on 1 October, and the government reached new agreements with mayors while opening a parallel fiscal and institutional agenda with all nine departmental governors. These developments strengthen executive resilience, but they do not remove the broader political risk.

The most important break is now institutional. Attorney General Roger Mariaca was detained together with other prosecutorial officials after US allegations involving corruption and protection of drug-trafficking networks. Bolivia’s government says it is investigating a criminal structure embedded in the justice system, while the Public Prosecutor’s Office initially challenged the legality of the operation. Those competing claims are not judicial findings and should not be presented as established facts. The episode is nevertheless systemic because it affects the institution responsible for politically sensitive investigations, including the Fernando Cerimedo case.

Cerimedo remains primarily a reputational and political risk for the presidency: no publicly available evidence currently establishes criminal responsibility by Rodrigo Paz. The new problem is institutional credibility. The detention of the official overseeing the prosecution raises questions about continuity, independence and public acceptance of future prosecutorial decisions. Vice President Edmand Lara has demanded due process and challenged aspects of how the office could be filled on an interim basis, widening the Paz–Lara split beyond their earlier dispute over presidential succession during foreign travel.

On the economic front, Bolivia’s internal legislative hurdle for the IMF package has been cleared, but the external step should not be treated as complete. The IMF’s latest primary public release still describes the arrangement as a staff-level agreement subject to prior actions and Executive Board approval. Until the Fund publishes a formal Board decision, projected disbursements should not be treated as available reserves. The recent easing in the official exchange rate and Moody’s upgrade from Caa3 to Caa2 with a positive outlook are favorable signals, although Bolivia remains a high-credit-risk sovereign and external liquidity constraints are not considered resolved.

Fuel-related social conflict has also changed form. Supreme Decree 5716 replaced the previous diesel framework, and the transport sector’s national protests proved geographically fragmented. Agreements between YPFB and fuel hauliers reduce the immediate risk of a nationwide logistics breakdown. At the same time, opposition to the diesel reform is spreading beyond transport, including urban teachers, while Supreme Decree 5727 on the reorganization, dissolution or liquidation of state-owned enterprises opens a second implementation front with potential union and employment consequences.

The strongest stabilizing factor may now be territorial politics. Paz has signed a so-called 50/50 agenda with major-city mayors and begun a similar negotiation with departmental governors. These channels reduce the risk of complete political isolation. The central question is therefore whether Bolivia’s separate crises remain desynchronized. A convergence between the Public Prosecutor crisis, the Paz–Lara confrontation, social mobilization against the economic decrees and an inability to reproduce parliamentary majorities would materially worsen the outlook. Conversely, formal IMF Board approval, sustained foreign-exchange normalization and continued fragmentation of the protest fronts would strengthen the government’s capacity to absorb the shock.

Key sources

OEA, High-Level Mission / democratic order — source

OEA, dialogue and social peace, 11 Sep — source

Associated Press, IMF programme status and Board approval still required, 19 Sep — source

MEFP, PL 723 legislative treatment — source

BCB, official exchange-rate table, 1 Oct — source

MEFP / Moody’s, sovereign rating update — source

YPFB, fuel-haulier agreement — source

MHE, Electricity Law sent to legislature — source

Presidency, 50/50 agreement with mayors — source

Presidency, 50/50 agenda with governors — source

Associated Press, Mariaca detention — source

ABI, government allegations in Mariaca case — source

La Razón, Lara due process / interim prosecutor — source

Washington Post, Cerimedo investigation — source