He International Monetary Fund (IMF) estimated that the “efforts” made by the Government on the fiscal front “must be complemented with a continued rationalization” of energy subsidies.
According to the organization, following increases in electricity and gas rates of an average of 350% and 200%, respectively, in the first quarter of 2024“authorities plan to achieve full recovery cost for most users and replace the current tariff segmentation scheme with one that supports only the basic energy consumption basket of vulnerable households during the second quarter of 2024″.
In a new edition of his staff reportthe IMF highlighted that, to this end, “detailed reforms have been developed for the transition to the new scheme and A new decree has been issued to eliminate price limits that are linked to the salary indexation formula“.
Consequently, he pointed out that Adjustment of electricity prices (PEST) and gas prices (PIST) expected to occur in the coming months after some delays“while stricter limits on subsidized electricity consumption will be established as necessary.”
“These actions are expected to ensure a 0.7% reduction in the energy sectora subsidy bill this year and regularize the sector’s finances,” the Monetary Fund report emphasized.
Meanwhile, he pointed out that The reduction of urban transport subsidies will continue (0.1% of GDP by 2024), with the help of additional increases in bus and train fares in the Greater Buenos Aires Metropolitan Area; Also, he said, transfers to the state water company are being reduced, in line with the projected increase in rates under the new indexation formula.
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