Seeking to stabilise public finances, Paz pivoted toward international financial institutions and private business sectors.
Since early May, indigenous groups, miners, teachers, and factory workers have maintained relentless roadblocks.
The disruptions have fractured national supply chains, triggering acute shortages of food, fuel, and medical supplies in major urban centres, devastating markets, and paralysing hospitals.
While protesters demand a reversal of austerity measures to counter the cost of living, Paz has defended his spending cuts and the reduction of state fuel subsidies as necessary to stabilise the economy.
The salary cuts were announced just 24 hours after a highly anticipated dialogue between the government and indigenous leaders collapsed.
The Paz administration has repeatedly asserted that behind the social chaos lies former president Evo Morales, who they claim is manipulating the unions in a desperate bid to force a return to power.
Morales was legally barred from competing in the 2025 election that brought Paz to power.
