Govt cuts utility subsidies, creates committee for further study

Thursday, November 3, 2011

The Argentine government has said it will eliminate all subsidies for water, gas and power utilities and other sectors and create a committee to study further changes to the subsidy regime.

Subsidies for water, electricity and gas utilities will be lifted immediately, the federal planning, public investment and services ministry and finance and economy ministry (MECON) said in a joint release.

The proposal also comprises lifting subsidies for Buenos Aires' Ezeiza international and Aeroparque Jorge Newbery airports, as well as fluvial passenger ports and companies in the resource extraction, finance, and telecoms sectors.

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The measure is expected to save the Argentine government some 600mn pesos (US$141mn) annually, the release reads.

"The policy of subsidies has been part of the success of Argentina's economic development," said finance minister and incoming vice president Amado Boudou, who added that subsidies must change "to become a valid instrument of economic growth and development."

The planning and finance ministries have created a committee to plan the modifications. The group will draw up periodical reports that will be taken into account by both ministerial offices when a revision of the subsidy structure is required.