MercoPress. South Atlantic News Agency

“End of subsidies with no utility rates modifications” announces Argentina

Boudou and De Vido said administration of the underground transport system will be passed to the City of Buenos Aires

Economy Minister Amado Boudou and Planning Minister Julio de Vido announced Wednesday in a press briefing, a full lift on subsidies; a decision which will reach various public sectors, including electricity gas and water companies. The changes imply annual fiscal savings of 600 million pesos (140 million dollars).

Boudou mentioned that there will be a “100% lift on subsidies” which is to reach sectors such as: banks, financial firms, insurance companies, casinos, international airports and mobile phone companies within national jurisdiction. The changes will also reach the mining and petrol sectors.

De Vido stated that the measures to be taken were “a first step” toward generating more competition capacity in the economy.

The government ministers made the announcement while also declaring the creation of a special commission to analyse subsidy distribution, to be able to eliminate or reduce subsidies to different sectors.

Boudou defended the decision to create the commission and stated that the policies that have been used since 2003 “have had a positive impact on the way the economy functions”

Planning Minister Julio De Vido denied that the announcements made over subsidies implied a rise in tariffs on services.

“Utility rates will not be modified. What is being changed is the range for granting subsidies, depending on industrial needs” he assured.

“Perhaps on a weekly basis we will have lists of the partial or total deduction of subsidies,” De Vido added.

When questioned on the transport sector, in particular buses and trains, De Vido indicated that “we are moving forward the universal use of the SUBE card”.

Boudou and De Vido also announced that the administration of the subway system and the pre-metro in Buenos Aires will be passed along to the City Government.

On Friday a meeting is to take place to “move forward the transference of the subway and pre-metro transport services in the City of Buenos Aires,” De Vido stated in the press conference. He also underlined that, “since 2003 the national government has invested 1.700 million pesos and in 2010 gave out 706 million pesos in subsidies.”

The head of the Planning Ministry remarked that “there is no reason for the process of transference not to go ahead” of the subway and premetro to the City government. “We entrust our sincere faith in the City Government, as this is not a small thing, it is in need of ordering what should be done according to law,” he added.

The national Transport Secretary, Juan Pablo Schiavi assured that this measure is “a significant step forward” and underlined that “a transfer of resources is to be made”.

On his Twitter account, Buenos Airs City Mayor Mauricio Macri celebrated the announcement and said “we consider the chance to talk about the transferring of the administration of the subway to be very positive”.

Independent economists said it was too early to assess the impact of the 600 million pesos to be saved, because “the announced sum is but 0.85% of the 70 billion pesos (approx 16 billion dollars) which has been transferred to the public sector” (Government corporations’ deficits; subsidies to public services and for the import of fuel which the Argentine government financed between January and October this year).