Bolivian President Rodrigo Paz on Tuesday repealed four taxes and announced a 30% cut in public spending by 2026, in his first measures to encourage investment and tackle the worst economic crisis in four decades.

Regarding the spending cuts, which amount to 4% of Gross Domestic Product (GDP), the Economy Minister Gabriel Espinoza said, “it is a massive reduction,” arguing that the targeted cuts do “not reach the people".

"It is not related to basic services such as health, education, security, and infrastructure," Espinoza said, also advising on future expenditure cuts.

Paz highlighted the drop in country risk since he took office - from 1200 points to 955 - and the arrival of $550 million from a $3.1 billion global loan from the Andean Development Corporation (CAF) and the Inter-American Development Bank (IDB), which has helped to stabilize the value of the dollar, which in May tripled its price in the parallel market.

During the campaign, Paz promised gradual adjustments to overcome the crisis, characterized by fuel shortages and rising living costs.

Fuel imports are linked to the availability of dollars, but after two years of currency shortages, gasoline and diesel have been rationed on several occasions.

Bolivia imports fuel at international prices and sells it in local currency, subsidizing its cost by almost 50%, which constitutes one of the state’s most significant expenses.

Also, Paz announced at a press conference that he would remove Bolivia's national wealth tax, arguing that it had crippled growth and discouraged billions of dollars in investment since it was imposed by his left-wing predecessor, former President Luis Arce.

Paz also said he would scrap other levies that had stunted the economy, including a 0.3% tax on all financial transactions, which had long motivated Bolivians to keep clear of the formal banking system, instead stashing their savings under mattresses and floorboards.

But, perhaps even more importantly, Paz and Espinoza, said Tuesday that they wouldn't yet touch the pillars of Bolivia's economic model under the long-ruling Movement Toward Socialism, or MAS, party — that is, an official fixed exchange rate in which dollars now sell for half of what they do on the black market, and subsidies that keep Bolivia's retail price of gasoline among the world's cheapest.

AP video by Carlos Guerrero