Argentina Says It Overcame Energy-Fee Hurdle in IMF Agreement
(Bloomberg) -- Argentina has hammered out an agreement with the International Monetary Fund over how to handle energy subsidies, presidential spokeswoman Gabriela Cerruti said on Thursday, clearing a key hurdle as the government looks to refinance over $40 billion with the multilateral lender.
The country plans to subsidize homes based on their income: The richest families will pay market prices, with subsidies kicking in for poorer households, Cerruti said. She wasn't clear on the proposal for industrial energy users.
Argentina's energy subsidy bill soared to $10.9 billion last year, according to the General Mosconi Argentine Energy Institute, and finding a way to reduce that spending was a sticking point in the country's talks with the IMF for a new deal, which the government hopes to announce later Thursday, she added.
Read More: Argentina Reached a Deal With IMF Staff, President Says
Many Argentine homes and businesses pay far below market cost for power and natural gas, a wrecking ball for government finances and the business models of energy producers, transporters and distributors. But now the government “is determined to reach reasonable energy prices,” Cerruti told reporters.
Argentina is expected to announce additional specifics on its staff-level agreement with the IMF later on Thursday. Taking away subsidies is politically sensitive, as ex-President Mauricio Macri discovered to his detriment: He lasted one four-year term in office before getting voted out in 2019 after slashing annual subsidies to just $4.9 billion from $18.5 billion in 2015.
Read More: Argentina to Push Ahead With Means-Tested Energy Subsidies
The government will hold a public hearing at the end of April to discuss the plan. Large industrial users wouldn't receive any subsidies, according to a statement sent after the press conference.
Here is how the subsidy system would work for households, with fee increases based on a local salary coefficient:
- A first segment of users will pay the fees completely and won't be granted with any economic subsidy; they have “full payment capacity”
- A second segment will include users who fall under certain welfare programs and pay a “social fee”; their fee hike will be set at 40% of the previous year's salary coefficient
- A third segment includes remaining home users; their fee hike is set at 80% of the previous year's salary coefficient
©2022 Bloomberg L.P.
-
Signature Play: The Classic Cocktail Is Dead. Or Is It?
Classic cocktails are disappearing from India's cocktail menus. But they're still being ordered, taught to bartenders and borrowed from. So, who's really having the last drink?
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
