Bolivia is embarking on an economic transformation that few could have predicted just months ago. The country’s new president, Rodrigo Paz, has wasted no time in rolling out a raft of sweeping fiscal reforms that promise to reshape the nation’s financial landscape and send a strong signal to investors at home and abroad. After taking office on November 8, 2025, Paz and his Christian Democratic Party (CDP) ended two decades of Movimiento al Socialismo (MAS) dominance, bringing a decisive shift in both political tone and economic strategy.
At the heart of Paz’s agenda is a bold plan to abolish four taxes—on wealth, gambling, financial transactions, and corporate promotions—while slashing public spending by 30 percent in the 2026 budget. The government is pitching these moves as the starting point for a broader campaign to modernize Bolivia’s economy, attract foreign capital, and restore investor confidence after years of stagnation, inflation, and capital flight. According to the new administration, the measures are also meant to streamline a fiscal system they describe as “fragmented and punitive,” inherited from the previous leadership.
“These are inefficient taxes with little return, but they discourage investment,” President Paz told state workers in Cochabamba, as reported by El Diario. “Getting rid of them is about efficiency, transparency, and restoring confidence in Bolivia’s economy.” The president’s words echo a wider sentiment within the government: that Bolivia must shed outdated levies and bureaucratic bloat in favor of a system that rewards productivity and innovation.
The four taxes on the chopping block—wealth, gambling, financial transactions, and corporate promotions—collectively account for less than one percent of Bolivia’s fiscal revenue. Yet, as Finance Minister José Gabriel Espinoza told La Razón, “They do not even cover the administrative cost of collecting them.” Espinoza went further, stating, “We need to eliminate ineffective taxes such as the gambling levy and channel those resources back into employment, investment and innovation.”
Perhaps the most controversial of these is the wealth tax, introduced in 2020 and levied on individuals with assets above $4 million. Paz has been adamant that the tax did more harm than good, claiming it led to the flight of more than $2 billion in capital, much of it to neighboring Paraguay. “It drove away more than $2 billion, which went to neighbouring countries like Paraguay. These are obstacles that generated no return for the country,” Paz argued. His administration repealed the tax soon after taking office, hoping to reverse the outflow of capital and signal a new era of openness to investors.
The planned abolition of the gambling tax has drawn particular attention, not least because Bolivia’s regulated gambling sector is tiny. Only one licensed casino operates legally in Santa Cruz de la Sierra, while most gambling activity—especially online—remains unlicensed or takes place offshore, leaving virtually no taxable base. Under Law No. 060 (2010), all gambling must be state-authorized, and there is no domestic framework for online licensing. The country’s gambling regulator, Autoridad de Fiscalización del Juego (AJ), has yet to comment on the reforms, but it continues to enforce strict controls, seizing hundreds of illegal slot machines every year and cracking down on unauthorized online bingo operations.
Observers see the repeal of the gambling tax as largely symbolic, yet meaningful. It signals official recognition that Bolivia’s fiscal and regulatory frameworks have not kept pace with the realities of today’s digital economy. While there’s no indication the government plans to liberalize the gambling sector, removing the tax is viewed as a confidence-building gesture aimed at investors wary of unpredictable or burdensome regulation. “Bolivia is building a more predictable and investment-ready economy, capable of delivering the stability that global markets have long sought,” Paz told his supporters, according to El Diario.
The government’s fiscal overhaul doesn’t stop at taxes. Finance Minister Espinoza has confirmed that the 2026 budget will be “rewritten to aggressively reduce current expenditure that doesn’t reach the people,” with the goal of “eliminating the fat of the state.” The targeted 30 percent reduction in public spending represents about four percentage points of GDP, a dramatic cut that has already resulted in the reduction of ministries from 17 to 14. Where the axe will fall remains unclear, but the administration insists the focus will be on trimming bureaucracy rather than cutting essential services.
To help bridge the fiscal gap and support its reforms, the government has secured $550 million in financing from the Andean Development Corporation, part of a larger $3.5 billion loan package. This injection of funds is expected to provide much-needed breathing room as Paz’s administration tackles inflation, fuel subsidies, and a chronic shortage of foreign currency. The boliviano has been pegged at 6.96 per US dollar since 2011, but a severe dollar shortage has pushed the informal-market rate to as high as 10.40, driving up prices in the import-dependent economy. Despite campaign promises to review fuel subsidies and the fixed exchange rate, Espinoza said any changes would be premature and potentially destabilizing in the current inflationary climate. “It would be too irresponsible to start with those measures while there is still an inflationary process,” he told La Razón.
Meanwhile, Paz’s administration has launched a sweeping audit of state-run companies and institutions, establishing at least ten “truth commissions” to investigate alleged corruption in sectors including hydrocarbons, telecoms, transport, and lithium. The president has accused the previous MAS-led government of presiding over a “sewer state,” alleging mismanagement and irregularities that could amount to “embezzlement of up to $15 billion.” The scale of the investigations is unprecedented in Bolivia’s recent history, and their findings could have far-reaching consequences for public trust and the rule of law.
The Confederation of Private Entrepreneurs, Bolivia’s leading business group, has already welcomed the reforms. Many in the private sector see the abolition of inefficient taxes and the promise of a leaner, more transparent state as critical steps toward making Bolivia a more attractive place to do business. Still, skeptics remain. Some worry that deep spending cuts could undermine public services and social programs, while others question whether the government can deliver on its promises without tackling structural issues like fuel subsidies and the exchange rate.
For now, the mood in La Paz is one of cautious optimism, tinged with uncertainty. Paz’s reforms have set Bolivia on a new course, but the road ahead is fraught with challenges—from stabilizing the currency to rooting out corruption and ensuring that the benefits of growth reach all Bolivians. What’s clear is that the country is undergoing its most significant economic recalibration in a generation, with the world watching to see whether this bold experiment can deliver the prosperity and stability that so many have long sought.