Subsidies for water, energy and transportation fell 15% in real terms in the accumulated January-May, compared to the same period of the previous year. This is explained to a greater extent by the rise in electricity and gas rates and the implementation of segmentation. Although product of the historic drought the Government will not meet the fiscal goals with the International Monetary Fund (IMF)aspires to exceed the goal of annual spending for energy subsidies.
The energy subsidies fell 16.1% real year-on-year in the accumulated January-May, according to the latest report made by the Rates and Subsidies Observatory of the Interdisciplinary Institute of Political Economy (IIEP), which depends on the UBA and the Conicet. Transfers to Energía Argentina (formerly Enarsa) were $466.9 billion, a jump of 146% in real terms, due to the advance purchase of LNG ships.
However, transfers to Cammesa were for $440.300 million, a real decrease of 49%. In the same period of 2022, the segmentation still had not started and energy had reached record values as a result of the war in Ukraine.
Energy is the main item, occupying 79% of the total subsidies. Although these first 5 months there were no transfers for the gas plan I, II and III as if there was in 2022, if funds were allocated to the call Ar Gas Planwhich were $32.300 billion, a real 189% more than the previous year.
In the case of water, the subsidies had a real reduction of 28% in the accumulated January-May. In the case of transportation, the drop in the cost of subsidies was 9.6%. The largest percentage increase (+34%) occurred in transfers to the railways. Another point observed in this area is that until May, the state-owned Aerolíneas Argentinas did not receive subsidies.
But, the largest item of subsidies to transport it is allocated to the transport infrastructure system fund, where the passenger transport subsidy is financed. They were $112.700 million, a real increase of 19%. In January of this year, revenues reached 11% of the cost of providing the service, while in August it is expected to reach 17%, even though the Economy defined that the ticket increase every month due to inflation.
One fact that they observe in the study center is that the floating debt in terms of subsidies was reduced, and by May payments to Cammesa had been regularized. However, despite the fact that Energía set the seasonal electricity prices Until October 2023, not all distributors applied it in their rate charts, so the work warns that the “mismatch” between the price charged and the price paid by each distributor could worsen, this could have an effect on the debts of these with Cammesa.
Subsidies and the IMF
Subsidies play a key role in public finances, representing the 12% of primary expenses, during the first four-month period of 2023, according to the IIEP. This is 2 points less than in the same period of 2022, but “double the average weight observed in 2020 and 2019.” In fact, in the first four months of this year, subsidies explained 83% of the primary result.
As advanced to Ámbito official sources, the discussion about subsidies was left off the negotiating table with the IMF for the moment. “Because of the gas pipeline, the drop in costs and the low temperatures, we are going to exceed the goal for this year,” said a senior source from the Ministry of Energy, headed by Flavia Royón. However, they will monitor the impact of inflation. This month they launched the comprehensive rate review process and in November there will be another public hearing.
Although as a result of the segmentation there were high increases for higher-income users, the IIEP report shows that the rate experiences a very strong drop for lower-income users. Even so, the weight of the tariffs will rise in all revenues as a result of the greater use in the winter, but in comparison with other countries, the tariff continues to be well below regional levels.
Source: Ambito
