The Government seeks to save $ 300,000 million by reducing energy subsidies

With tariff segmentation and other measures, the Government will seek to save next year more than $ 300 billion in energy subsidies. That is one of the ambitious goals proposed by the Minister of the Economy, Martín Guzmán, to reduce the fiscal deficit and close an agreement with the International Monetary Fund (IMF) to refinance the debt.

The calculation It follows from the premises of the 2022 Budget sent to Congress in September, still without a date of treatment in Congress.

The idea is to reduce this spending from 2% of GDP in 2021 to 1.5% in 2022. If the expected level is maintained this year, $ 1,203,544 million should be allocated next year. An account that will now be $ 902,658 million, $ 300,886 million less.

The decision is sensible because the cost of energy must be financed through subsidies or rate increases. After Macri’s freezing in 2019, the former was mostly chosen and increases lower than inflation were authorized in 2021 (9% light and 6% in gas). But now, Faced with the need to accelerate an agreement with the Fund, the Government began to review its steps.

Thus, the intern for the rates that at the time confronted Kirchnerism and Guzmán would seem to have been left behind with the re-registration of electricity service users. The measure serves to better identify consumption and allows you to fine tune the “segmentation” of future rates, a policy that the minister insisted again in recent days.

This item was one of the most expansive in October: it grew 158% year-on-year, more than triple inflation. in that period and only behind spending on public works. And it’s supposed to be one of the main adjustment variables in the discussion with the IMF staff, an organization that in recent weeks asked to reduce these expenditures “gradually”.

In that line, the Budget foresees a strong reduction of funds to CAMMESA, the most important expense in energy subsidies destined to cover the costs of electricity generation that are not covered by the tariffs. The wholesale company of the state-controlled electricity system will receive $ 609,198 million, according to calculations by the Institute of Thought and Public Policies, headed by Claudio Lozano.

Another of the planned measures is the reduction of subsidies to the company IEASA (exENARSA), in charge of imports of liquid fuels and natural gas. The allocation will be $ 348,120 million in 2022, half for operating income from fuel sales and the rest for transfers to finance the difference between the import price and the local sale price.

There will also be fewer resources to subsidize the supply of natural gas Through the program “Formulation and Execution of Hydrocarbons Policy”, which will add $ 113,878 million in 2022. Of that total, almost half will go to the Argentine Gas Plan, launched in November 2020, and it is expected the expiration of Resolution 46/2017 of the management of Macri, that according to Guzmán it would save US $ 600 million ($ 60,000 million at the current exchange rate).

This adjustment in the subsidies supposes an increase in the rates, since said disbursement depends on the cost of energy, the amount of energy and the level of increases in the tickets. According to Economía, today users cover 37% of wholesale costs through the payment of invoices and 43% of these costs are expected are covered by the tariffs in 2022.

A) Yes, some economists estimate increases in households of up to 72% next year. “We don’t have all the assumptions used by the government, but if everything else remains constant, the Budget suggests a significant rise in rates, most likely above the inflation of the Budget, “he said. Marcelo capello, president of the Ieral.

For Alejandro Einstoss, an economist at the Argentine Energy Institute (IAE), the assumptions of the bill imply that a family in the AMBA will have to face increases in its electricity rate of 72%, while the gas bill will have to increase by 60%, if inflation were 33% as the budget says and the exchange rate in December 2022 would be $ 131 per dollar.

“The projection of subsidies is optimistic, but necessary. We are going to end up with a primary deficit of just over 3 points in 2022 and the subsidies are going to be more or less the same, it is logical that the IMF guns look at that game”, said the energy expert, although he acknowledged that “it is very difficult to reduce it drastically because real income is very low in dollars“.

The other obstacle is inflation, which this year will exceed 50% and will be higher next year if the dollar and rates accelerate. “If you do not contain inflation, it will be difficult to reduce subsidies, for them to fall in real terms, the bills should increase much more and it generates a problem of social acceptance, which was what happened to the previous management“, dijo Einstoss.

By Editor

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