Bolivia’s government is moving to introduce legislation offering private investors more competitive tax and royalty terms as it attempts to revive an economy affected by falling gas production and critically low foreign-currency reserves.
President Rodrigo Paz’s proposed Investment Law is the first stage of a wider programme intended to reduce state control over energy and mining. Additional bills are expected to expand private participation in electricity generation and trade while changing the role of state energy company YPFB.
Officials have proposed limiting the combined tax and royalty burden on energy companies to approximately 50 per cent, offering incentives for new exploration and strengthening legal protections for existing contracts.
The reforms would mark a major departure from the state-led model established under former President Evo Morales, whose administration nationalised energy and other strategic assets between 2006 and 2012.
Bolivia needs new exploration and production investment as its once-important natural-gas industry declines. The country’s economy is projected to contract by 3.3 per cent in 2026, while fiscal deficits exceed 10 per cent of gross domestic product, according to the International Monetary Fund.
The government has reached a preliminary three-year, US$1.9-billion agreement with the IMF that could unlock at least US$5 billion from other multilateral lenders. Both the financing package and investment reforms require political approval.
Businesses should therefore treat the proposals as an emerging opportunity rather than a completed policy change. President Paz leads a fragile coalition, while spending reductions and the removal of fuel subsidies have already triggered protests.
If approved and implemented credibly, the reforms could attract exploration companies, mining investors, power developers and supporting-service providers. Success will depend on regulatory stability, transparent licensing and whether the government can maintain political support while restructuring the economy.
