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UPDATE 1-Bolivia should trade fuel subsidies for cash transfers, says IMF

·1 min read

(Adds details from IMF statement)

Sept 14 (Reuters) - The International Monetary Fund said on Wednesday that Bolivia should cut its vast fuel subsidies and instead spend part of the funds on cash transfers for its poorest citizens, as part of a broader fiscal adjustment program.

While Bolivia has remained largely immune to the inflation plaguing much of Latin America and the world in recent months, the IMF said in a statement that this has been achieved through subsidies and price controls on food and fuel, as well as keeping the national boliviano currency at a "de facto peg" against the dollar.

The IMF said these measures, especially the fuel subsidies, will push the country's deficit to 8.5% of gross domestic product this year. It called for a more focused program of cash transfers for the poor in order to strengthen Bolivia's finances.

"An effective communication strategy will be critical to raise awareness of the regressive nature of energy subsidies," it said in a statement.

The IMF said Bolivia's current fuel subsidies are expected to cost the Andean nation about 3.7% of its GDP in 2022. (Reporting by Marcelo Rochabrun; Editing by Christian Schmollinger and Leslie Adler)