The future of public service tariffs: what Cristina Kirchner wants

The future of public service tariffs is one of the great unknowns in economic policy, and its definition will be decisive both for the development of inflation and for negotiations with the International Monetary Fund (IMF).

In this context, the national government not only postponed the updates again, at least until March, but also activated the stages of drawing up the new tables of the costs of electricity, gas and transport.

The extension of the freeze was formalized by decree 1020/2020, published Thursday in Official Bulletin.

The same text also calls for the establishment of a comprehensive review of tariffs (RTI) on the costs of services that come under federal jurisdiction.

Current auditors from the National Gas Regulatory Entity (Enargas), Federico Bernal, and the National Electricity Regulatory Entity (REC), Soledad Manin, will be tasked with sitting at the negotiating table in because of “their technical skills and their studies already done on the opinions”.

Bernal and Manin are part of the ranks of Cristina Kirchner, whose vocation is to profoundly modify the increase scheme put in place under the Cambiemos government to “give the people back their capacity to consume”.

At least that’s how the vice-president announced it last February, when she presented her book in Cuba. cordially.

One of the first measures promoted by Alberto Fernández upon assuming the presidency was to suspend rate hikes, as part of a plan to deindex the economy and to contain the inflationary race that accumulated in 2109 a record jump of 53.8%. hundred.

The decision was then upheld in the face of the complications imposed by the coronavirus pandemic, but it is an issue that is urgently resolved not only because of inflation, but also because of the discussions that Minister Martín Guzmán is having with the IMF and which require commitments regarding the management of fiscal accounts.

“There was already a complete revision of the tariffs, which should last five years, and they returned it”, lamented Daniel Montamat at the request of this media.

The former Nation’s Energy Secretary and former YPF President added that “we’re going to have to realistically assume that energy has a cost and that cost is paid for, in the tariff or with subsidies, which are not a gift from Fernández nor were they a gift from Macri, but they are paid with taxes ”.

For now, President Fernández has indicated that Bernal and Manin will have up to two years to define the new price list.

However, it seems uncertain what position will be weighed, especially since it is also an issue that generates differences within the governing coalition.

Guzmán and the coincidences

This is because Cristina’s request does not seem to coincide with Guzmán’s position, which believes that the increases should be defined according to inflation, which would increase by 28%, as planned in the budget.

It is also unclear what will happen to the accumulated delay in 2020, which ends in a price increase of even more than 30%.

“This discussion must be consistent with what has been entered in the budget. And in the Budget, subsidies measured as a percentage of GDP (gross domestic product) do not increase from this year, which requires, unless costs fall significantly, that rates increase based on nominal GDP, which is the multiplication of GDP plus inflation. That gives you, at least, 35 percent, “calculated economist Daniel Artana before consulting this media.

Artana added that it is essential that “the government has consistency between what the Ministry of Energy does, what the Ministry of Economy has put in the budget and what the regulators do, because it there is not much space to place treasury money.

This last mention is the one that gains weight in discussions with the Fund, as it is certain that the national government does not have the possibility of increasing the level of the deficit, as would be required by an increase in subsidies to transport and fares. transport. energy.

“The tariff is an issue which, if it continues to be postponed, becomes an unmanageable bullet later on. I do not see that the Treasury has the possibility of increasing subsidies next year without jeopardizing a budget that is already too in deficit, moreover, ”pointed out Artana.

Montamat added that in addition to the negative effects on inflation and discussions with the IMF, the postponement of the increases generates a critical situation in the energy sector because “the payment chain is broken” and everything affects the quality. of service. .

“The rates, more than frozen, are degraded by inflation. Each month, they deteriorate more and they are not even enough to pay the operating costs ”, he maintained.