The cuts to the electricity tariff subsidies were stopped months ago and no one in the Government explained why the initial plan would not be fulfilled. This means that the subsidies continue to represent a high cost for a State that must inevitably reduce its deficit as part of the necessary measures to stabilize the macroeconomy.
Let us remember that the famous energy segmentation was discussed while Martín Guzmán was Alberto Fernández’s Minister of Economy. After long and inexplicable comings and goings, Sergio Massa, upon assuming the portfolio, announced its launch.
The plan contemplated segmenting households throughout the country into three levels, according to their purchasing power. Those at the highest level would lose all the subsidies in three sections: in September-October of last year, 20%; between November and December 2022, another 40%; and between January and February of this year, the remaining 40%.
Those who wish to keep the subsidy should register in a register specially set up for this purpose. By the way, the national and provincial authorities have been struck by the fact that, some nine months after the implementation of the new system, the adherents to the Registry of Access to Energy Subsidies are so few. Do people not want the subsidy or do they not know that now they have to apply for it? When in doubt, more than one official has become anxious, especially because of the upcoming electoral cycle.
Perhaps that is why only the first section of the removal was fully applied. The second one was smaller than advertised. The third was put on hold. In conclusion, today the segment with the highest purchasing power pays barely 41% of what it costs to generate energy; the middle segment pays 17%; and the low segment pays 14%. In all three cases, the difference is covered by the State with subsidies.
As can be seen, the reality is that the State subsidizes, despite the announcements, between 60 and 85% of the consumption of all households. And since the increases in tariffs also remained below inflation, the perception persists that electricity is cheap and demand continues to grow: the low segment consumes 61% of all the energy that goes to residential homes; the middle segment, 14%; and the high, 23%. What remains for the sum to reach 100 is explained by particular cases that exceed the monthly consumption limit set by the subsidy.
The International Monetary Fund, when approving the recent revision of the program with Argentina, warned that “more solid policies are needed to safeguard the stability of the program” and mentioned, precisely, the need to speed up the removal of energy subsidies, especially for households high income.
The authorities must advance in the removal of subsidies: the fiscal deficit fuels inflation.