Surveys show that the main problem stated by those questioned is inflation, the mother of all the economic battles that governments have been waging for decades in Argentina. With little luck, this administration reached a way out that seemed difficult but now it becomes more complicated, almost epic: update the value of public rates, subjected since 2002 to political vicissitudes and chosen since 2019 as one of the inflationary anchors.
Mirror. Subsidies for public services grew from less than 1% in 2005 to a peak in 2014 with 5.2% of which, according to data from the Argentine Budget Association (ASAP), 3.7% corresponded to funds for make up the gap between the costs and the artificially low price. The Macri government took it as a flag and managed to reduce these to 1.1% of GDP by 2019, frustrating the goal of eliminating them. By the end of last year and thanks to the freeze while inflation climbed floors (today 70% annually), it rose to 2.5% and 4% was projected for 2022 only in concepts of energy subsidies. There is still another section to account for: that of transport (urban public and eventually cargo) which, in the midst of the oil shock launched in the post-pandemic and exacerbated by the war in Ukraine, it would be between 6% and 7% of GDP by the end of the year, according to estimates by Jorge Colina, economist at IDESA. In his opinion, the idea of unfreezing tariffs is a late and inappropriate reaction, especially due to the way chosen to carry it out. “I don’t think it’s applicable because the tool is inconsistent and then you have to sign up for a registry. But if they don’t sign up, what are they going to do: will they take the subsidy out of everyone?
The method. Precisely what is striking is the singularity of the path finally chosen to allocate the subsidies: at the beginning it was going to be decided who would be taken from the national administration, but then the burden of proof was reversed: everyone is rich until they become rich. prove the opposite. “In this case, it is a discrimination against people with resources and externalization indicators of ability to pay, something that I do not know exists in the world”, highlights Santiago Urbiztondochief economist at FAITHFUL and specialist in the regulation of public services.
The only case that can be considered a precedent, according to the economist, is the system used to date in Colombia, with an economic segmentation of the entire population into five categories, according to patrimonial, income and social indicators: the highest pays a 20% more than the cost, the following two have no benefit and the two lowest, a 20% subsidy below the technical rate. In other words, a fifth of the population subsidizes the 40% most vulnerable. But in the Argentine case, the established guidelines that are still being elaborated, would be much broader (up to 300% according to some previous calculations).
“The correct way to establish a subsidy policy is, first, that the prices reflect the costs. And only then, whoever cannot pay for it, may be able to transfer the amount of service that he can consume more cheaply, ”explains Urbiztondo. Of course, to start this mechanism, It is necessary to know a key piece of information: what is the “technical rate”, on which the calculations are made. Something very difficult to do in a system full of controls, multiple exchange rates, state companies that desert the market, traps and foreign trade quotas.
Rules. In gas, the big jump in the price of liquefied natural gas and the participation of contracts with supplier countries (such as Bolivia, in the case of Argentina) mean that the final value is not easy to establish either, but it would be somewhere between floor (which is paid to the producers at the wellhead) and that of the gasification boats, which today are the star of the market. In addition, the thermal power plants, when the fluid became more expensive, were supplied with more diesel, producing a saturation of imports and the shortage that exists this winter for transporters and the field.
For its part, in the electricity sector, there is a decentralization from a single wholesale supplier, the Wholesale Electric Market Company SA (CAMMESA) which is the one that supplies the regional distributors. PBut it is also the great bellows of the market: at the end of the year it was owed $240,000 million, funds by which the companies themselves financed their growing current expenses or the ad hoc subsidies they grant to their own clients.. That is, a parallel system of subsidies that feeds the snowball that ultimately translates into a fiscal deficit that, in turn, generates inflation that ends up distorting prices and the entire tariff system.
The expectation of the implementation of the unique system of subsidies established will test, once again, the coordination of the state bureaucratic apparatus.
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