Bolivia's Congress approved the Bolivia IMF deal on Friday, a $1.9 billion loan agreement with the International Monetary Fund that gives President Rodrigo Paz a major victory in his effort to pull the country out of a deepening economic crisis. The Senate ratified the agreement a day after the lower house approved it, clearing the final legislative hurdle for the three-year financing program, the Associated Press reported.

The Bolivia IMF deal is part of a 36-month program under the IMF's Extended Fund Facility. It would let the South American country tap $1.9 billion in IMF financing and open the door to more than $5 billion in additional funds from institutions such as the World Bank and the Inter-American Development Bank, according to Reuters. Read the Reuters report and the AP report for the full details.

The country is grappling with foreign currency shortages, fiscal deterioration and declining international reserves, according to Reuters, which described the agreement as a cornerstone of Bolivia's effort to regain access to external financing.

What the Bolivia IMF deal demands

The money comes with conditions. In return for the financing, Bolivia must implement a stabilization program that includes reducing the fiscal deficit, enforcing greater monetary discipline, adopting a more flexible exchange rate, and carrying out reforms to boost productivity and improve the investment climate, Reuters reported. The program also seeks to limit how much the central bank funds the public deficit. In plain terms, La Paz is promising to spend less, print less money to cover its bills, and let its currency move more freely, while trying to keep the economy growing.

One of the most sensitive conditions concerns fuel policy. The deal calls for the elimination of government fuel subsidies, while the government maintains that spending cuts must be accompanied by protective measures for the most vulnerable sectors. Economy Minister Christian Morales defended the Bolivia IMF deal before the legislature, noting that the government had inherited an economy with $3.17 billion in net international reserves, of which only $52 million consisted of liquid reserves.

The government projects that reserves will reach nearly $6 billion by the end of 2026, almost $8 billion in 2028 when the program concludes, and around $9.07 billion in 2031. It also plans to reduce the fiscal deficit from 9.1 percent of gross domestic product in 2026 to 6.4 percent in 2027 and 3.8 percent in 2028, according to Reuters.

Paz calls it a historic step

President Paz, part of a wave of new Latin American leaders allied with the Trump administration, welcomed the vote as a "historic step" and a "resounding signal of political maturity, unity and economic certainty," the AP reported. His market-friendly government took power last year after nearly two decades of socialist rule, and the IMF first announced a staff-level agreement in July after months of negotiations.

The Bolivia IMF deal still requires approval from the IMF's executive board before any funds can be disbursed, the AP reported. But Morales told senators that congressional approval would give other lenders, including the World Bank and the Inter-American Development Bank, greater confidence in the government and help it secure about $5 billion in additional financing.

Unions threaten renewed protests

The conditions attached to the agreement threaten to reignite unrest in Bolivia. Unions have warned of renewed protests over the fuel subsidy cuts, the AP reported. Weeks of road blockades in June and July paralyzed much of the country as demonstrators demanded Paz's resignation, and the government fears a repeat if fuel prices jump.

For ordinary Bolivians, the stakes of the Bolivia IMF deal are immediate. Fuel subsidies have helped keep transport and food costs down, so removing them risks pushing prices higher, which is why the government says the cuts must come with protections for the most vulnerable.

Congress on Thursday extended for another 90 days a state of emergency that Paz had declared to clear roads during those protests. The measure allows for military intervention and the suspension of some civil liberties. With the Bolivia IMF deal now cleared by Congress, the next decision sits with the IMF's executive board in Washington, which must sign off before the first dollar is released.