BOGOTÁ, April 1 (Reuters) – The Colombian government reduced the value of the gasoline subsidy starting Saturday, in an attempt to reduce the fiscal impact of the Andean country’s Fuel Price Stabilization Fund (FEPC).
The adjustments to fuel prices following the changes in the subsidy will cause gasoline prices to increase by an average of 401 pesos per gallon (about nine US cents), bringing the average price of gasoline to 11,167 pesos (2, $40) per gallon, the Energy Ministry said in a statement late on Friday.
Diesel prices will remain stable, the authority added.
The government of leftist President Gustavo Petro is faced with the task of dealing with the country’s runaway FEPC to comply with the so-called fiscal rule, a measure established in 2011 that imposes restrictions on fiscal policy to block the deterioration of public finances.
“The increase in the price of regular gasoline is intended to reduce the fiscal impact of the FEPC on the national government due to the dynamics of international prices for refined products,” the Finance Ministry explained in a separate statement late on Friday.
Last year, Colombia’s autonomous fiscal rule committee (CARF), which oversees public finances, urged the government to include FEPC debt in its targets to tackle the fiscal deficit.
“A fuel subsidy of close to 40 billion pesos a year is unsustainable,” the committee said at the time.
It is estimated that the FEPC deficit will close 2023 at 28 trillion pesos, with a decrease driven by measures such as cutting the gasoline subsidy, said a spokesman for the Ministry of Finance.
The Colombian government aims to reduce its fiscal deficit to 3.8% of GDP this year, from 5.5% of GDP at the end of 2022.
(1 dollar = 4,646.08 Colombian pesos) (Reporting by Oliver Griffin; Editing by Paul Simao; Translated by Diego Oré)
Source: Ambito
