About this work
Bolivia’s removal of its diesel subsidy creates new inflation risks through transport fares, social disruption and the parallel exchange rate. Jonathan Fortun puts December 2026 annual inflation at 8% to 12% in his base case, with risks tilted upward. A rise to 20% would require a combination of higher fares, conflict and a parallel exchange rate approaching Bs16 per dollar. He argues that subsidy reform was unavoidable given depleted reserves and monetary financing, but that delaying it has made the adjustment more difficult.