Bolivia endures its most severe economic downturn in 40 years, marked by inflation exceeding 20 percent annually. Rodrigo Paz, inaugurated as president on November 8, 2025, pledges a shift to
capitalism for all
to foster growth. This change signals the close of nearly two decades under socialist governance.
The Inauguration Ceremony
President Rodrigo Paz took the oath in La Paz's Plurinational Legislative Assembly. Attendees included delegations from over 70 nations, highlighting global interest.
Paz, aged 58 and son of a former leader, represents the Christian Democratic Party. His victory in the October runoff ended the Movement for Socialism's long hold on power.
Bolivia's Economic Challenges
The nation faces acute fuel and dollar shortages. Central bank reserves sit near zero, complicating imports.
Inflation has surged past 20 percent, outpacing regional peers. This stems from declining natural gas exports and exhausted subsidies.
Impact on Daily Life
Citizens queue for essentials amid rising costs. The crisis has fueled a black market for US dollars, worsening economic strain.
Foreign investment lags due to past nationalizations. Bolivia's economy contracts, with projections of 30 percent inflation by year-end.
Paz's Economic Policies
Paz advocates
capitalism for all,
emphasizing private sector growth and formalizing the informal economy. He plans tax cuts and decentralization while sustaining social programs.
According to economist Gabriel Espinoza, the economy verges on collapse, requiring urgent reforms.
Reforming Subsidies and Exchange Rates
Paz intends to reduce diesel subsidies swiftly for businesses. Gasoline subsidies will phase out gradually to protect consumers.
A flexible exchange rate system forms part of his strategy. These moves aim to stabilize finances and attract investment.
Foreign Policy and International Ties
Paz seeks to restore US relations, including embassy reopening and DEA cooperation. He criticizes isolation from failed ideologies.
In an interview, Paz stated,
I hope Bolivia returns to the world and the world returns to Bolivia.
Engagement with IMF and World Bank is planned. A $3.1 billion financing deal could provide relief.
Lithium Mining Opportunities
Bolivia holds vast lithium reserves, key for global energy transitions. Paz may revise laws to allow private extraction, boosting economy.
He plans to review Chinese and Russian contracts. This pivot could align with US interests in critical minerals.
Reactions and Insights
Analyst Juan Sola notes multilateral lenders' eagerness to support Bolivia. However, congressional alliances remain crucial for reforms.
Paz's approach draws praise for unity. Yet, balancing social spending with fiscal discipline poses challenges.
Public sentiment favors production over state dependency. This resonates in a nation weary of clientelism.
Potential for Crypto and Innovation
While not directly addressed, Paz's pro-business stance could ease Bolivia's crypto restrictions. Open markets may encourage blockchain in mining transparency.
This article highlights Bolivia's pivotal economic shift under Paz. It offers insights for investors eyeing Latin American opportunities in resources and reform.
