Argentine gov't reached deal to freeze price of fuel

Friday, August 18th 2023 - 11:00 UTC

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“People have to know that we know what is happening to them,” Massa stressed

Argentina's Economy Minister and presidential candidate Sergio Massa announced Thursday that fuel prices will be frozen until Oct. 31 after a 12.5% increase this week following an agreement with the country's leading oil companies, including the state-run YPF. After a previous 4.5% rise on Aug. 1, fuels accumulated an adjustment of 17.56% this month.

YPF was the last to adopt the new increment, following suit on Pan American Energy (Axion), Raizen (Shell), and Trafigura (Puma), which together dominate almost 95% of the fuel market.

“This was an agreement between producers, refiners, the Secretariat of Energy, Customs, and [tax bureau] AFIP, and implies that the 12.5% increase in all petrol stations will be the last until October 31 and we enter a path in which there will be no more fuel increases, as a result of a decision in which the impact of the devaluation is assumed by the consumer, partly by the companies and partly by the State which will resign part of the resources paid by the companies,” Massa explained.

“The oil and gas industry in Argentina is one of the great tractors we have in the country, part of the fall in the activity we had due to the drought is compensated by the remarkable increase of the oil and gas industry,” he added.

“There will be no more increases because there will be no more increases in the exchange rate,” Massa also said after the Argentine Central Bank (BCRA) devalued the peso by nearly 22% earlier this week in the aftermath of the Open, Mandatory and Simultaneous Primary (PASO) elections.

After three days on the rise, the “blue” (a euphemism for the “black market”) dollar dropped AR$ 20 Thursday and closed at AR$ 760, despite which the informal quotation accumulated a jump of AR$ 155 for a total of AR$ 414 so far this year after closing 2022 at $346. Thus, the gap with the official exchange rate stood at 115.7%.

The BCRA bought US$ 184 million in the Single and Free Foreign Exchange Market (MULC) Thursday, the fourth consecutive round with a positive balance totaling US$ 647 million so far this week and US$ 780 million this month.

Massa also announced Thursday that “there will be a lump sum for workers” in a move to mitigate the effect on consumers of the rampant inflation ahead of the Oct. 22 elections. He also said that until next week his status as minister will prevail over his status as candidate in light of the imminent closing of the agreement with the International Monetary Fund (IMF).