Among the economic advantages that the financial market gives to a government Javier Miley They stand out after they arrive Financial balance and achieving a significant reduction in inflation. However, the development that is most surprising – especially among former officials – is the speed with which it is being done – Reducing spending on energy subsidiesThis is a factor that has been one of the main burdens since 2003.
In 2014, Argentina was allocated The current equivalent of $21 billion to finance energy subsidies. Spending to avoid increases in gas and electricity prices represented 3.5% of GDP. The government itself Christina Kirchner I realized the unsustainability of this dynamic and scaled back Increase the weight of subsidies to 3% of GDP by the end of 2015When the Mauricio Macri administration took power.
The Campemos government has maintained a painful relationship with ratesQ: The increases faced several Supreme Court protections, and the sudden depreciation of the currency quickly made announcements of gas and electricity increases out of fashion, generating a huge political cost. Despite the difficulties, The administration was able to reduce spending on support by more than halfUp to 1.4% of GDP.
During the era of government Alberto FernandezSupport increased again in 2021 due to the repeated decision to freeze prices, and even more strongly, in 2022, when the Russian invasion of Ukraine generated a real tsunami in the European gas and gas market. Which led to a sharp rise in global prices. That year, support spending rose to 2.3% of GDP, although it later fell to 1.7% towards the end of 2023.
The current Libertarian government reduced the legacy burden to 1% of GDP in its first year in power Projects to be closed this year at a level approaching 0.65% of product ($3.9 billion USD)This is according to official estimates shared by the private sector.
By 2026, Ministry of Economy Plans to cut spending to 0.5% of GDP By modifying the segmentation system (which will remove differentiation by high, middle and low income). It could be even lower if the proposal is introduced in Congress Return to the original version of the cold zone system Limiting benefits to areas initially considered exclusivelyIn the cities added in 2021 on the initiative of MP Máximo Kirchneran establishment which was supported by the entire legislative branch.
There are two main factors that explain the observed decline in subsidy spending. On the one hand, despite inheriting a highly distorted macroeconomy, Miley received a boost from the completion of the Perito Moreno gas pipeline (formerly known as Nestor Kirchner), which connects Vaca Muerta with Buenos Aires. This work made it possible to replace imports of diesel and liquefied natural gas with local production, which is more economical and does not mean depleting the reserves of the Central Bank.
In addition to the decline in import volumes, the global price of gas has also fallen from the peak recorded in 2022. According to estimates by consultant Daniel Gerrold, energy imports between January and October It decreased by 75.3% this year compared to 2022representing a saving of US$9,013 million.
Regarding 2024, the structural change caused by the construction of the gas pipeline from the Neuquén Basin and the increase of production in Vaca Muerta and Tierra del Fuego – in this case due to outside– Resulted in a further decrease in imports by 19.7% (-722 million USD). “We can only wonder what will happen to the overall economy if this process does not begin.”Jerrold points out in his weekly report.
Lower gas costs also helped ease the prices of thermal generation, which represents more than 50% of the national electricity matrix.
Combined with low energy system, The government implemented a tariff modernization policy Which, unlike previous periods, was largely validated by society: requests for protection were lower than during the Cambimos administration and, according to gas and electricity distributors, In practice, delays in paying bills have not increased.
As a result, residential users today pay, on average, 55% of the actual cost of gas and electricitywhen in December 2015 they paid less than 20%. Next year, the government plans to increase housing coverage 76% for electricity and 79% for gas. If industrial and commercial users are included, the overall coverage is greater.
In the first ten months of the year, The state allocated $3,183 million to support energya decrease of 44% compared to the same period in 2024 (5,708 million US dollars), according to calculations of the consulting company Economía y Energía (EyE).
“The decline in subsidies on GDP can be explained, to a large extent, by… Increase in the value of the local currencyWhich means an increase in GDP measured in dollars, and thus a decrease in the relative weight of support.
In short, the combination of structural change in energy supply – driven by gas transmission infrastructure and domestic production growth – and a more cost-aligned tariff policy It allowed one of the most persistent distortions in the Argentine economy to be reversed in record time. The current path shows that reducing the weight of support is no longer a postponed goal, but rather has become one of the basic pillars of macroeconomic reorganization.