Spending on subsidies already amounts to 0.4% of GDP so far this year, with only one month of high prices due to the war.”
LCG Consultant
In three and a half months, the Argentine government has already consumed almost half of the budgeted expenditure to subsidize electricity, according to official data. As of Friday the 22nd, 335,342 million pesos (2,934 million dollars) had been accrued, mainly in payments destined to the Administrative Company of the Electricity Wholesale Market (Cammesa), or 47.83% of the total budgeted.
The data on the main budget item destined to subsidize energy is public and confirms the difficulty that the Government has in reducing this expense, the most unlikely of the commitments assumed with the International Monetary Fund (IMF).
The rate of execution of the disbursements destined for subsidies contemplates a month and a half of soaring international prices due to Russia’s invasion of Ukraine, which occurred almost in parallel with the increase in electricity rates in the metropolitan area and gas in nationwide network.
The budget allocated to Cammesa to compensate for the difference between the wholesale price and the one paid by users is the most important of the energy subsidies: $701,109.7 million (6,135 million dollars).
The other two items of energy subsidies show a slower rate of execution, but they are expected to speed up towards winter. The Formulation and Execution of Hydrocarbons Policies program, from which the oil companies that participate in the Gas Plan are subsidized, earned barely 13% of the 162,135 million pesos (1,418 million dollars) budgeted. Transfers to the Argentine Energy Integration (IEASA) to import gas total $243,546 million (2,131 million dollars), of which $27,167 million (237 million dollars) were executed, or 11.15 percent.
According to official sources, the reason for the bottleneck is the extension of the 2021 Budget and its lag against the acceleration of inflation. The Ministry of Economy estimated, in the agreement with the IMF, the publication of an updated 2022 Budget for April 15. The indicative date was postponed while the Government and Fund “recalibrate” the goals.
Energy specialists discount that spending will increase this year, especially due to the impact of the war on imported fuel prices. For Daniel Dreizzen, from Ecolatina, the account will rise to at least 13,000 million dollars, against 11,000 million dollars in 2021. Nicolás Arceo, from Economy and Energy, estimated that it could rise to 16,700 million dollars. The figure may be lower if the largest gas shipments from Bolivia are confirmed.