Government extends subsidy cuts to new residential areas, government buildings

Sunday, December 4, 2011

Argentina's government has announced a further 367mn pesos (US$85.7mn) in subsidy cuts, bringing the total cuts announced to date to 4.85bn pesos in the third stage of the initiative announced so far.

"There are three plans contributing to one objective, which is fair distribution of water, gas and power subsidies," planning and investment (Minplan) minster Julio de Vido said at a televised press conference.

New cuts will apply to 28,604 users, including government departments of capital Buenos Aires, highways, street lighting systems, and certain residential areas of the capital and the surrounding province.

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Starting on January 1, 2012, residential users in other delineated areas will be sent a declaration form with utility bills and may request to continue receiving the benefits for one of 12 reasons. Declarations will be evaluated on a "case by case" basis, de Vido said.

The figures provided do not include those who voluntarily opt-out of receiving subsidies, which is being implemented via a register opened last week.

The cuts are not related to fiscal problems but are designed to increase equality and encourage competition in the market, finance minister Amado Boudou said at the conference.

On November 16, the government announced 3.98bn pesos in annual utility subsidy cuts in addition to the 600mn pesos announced on November 2.

Business sectors including refining, gas processing, biofuels and agrochemicals will see subsidy cuts rolled out from December 1, when 40 of the country's highest grossing companies will have 100% of subsidies cut.