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July 28, 2014
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Kicillof confirms utility subsidy cuts

Economy Minister upholds that wages have remained above inflation for 10yrs

Without giving specific dates, Economy Minister Axel Kicillof yesterday reaffirmed that the government will eliminate public utility subsidies for “those who have the most,” referring to wealthier sectors of society.

In what was the strongest confirmation that the government is getting ready to cut down on subsidies, the minister told Radio Continental he does not want to see those without subsidies “going out to protest for paying what they should,” seemingly referring to the pot-banging protests against the government that were launched the last time the government pursued an effort to decrease subsidies, shortly after President Cristina Fernández de Kirchner’s 2011 re-election.

“We have been working on the concept of tariff equity” for electricity, gas and water Kicillof confirmed, adding that “tariffs are subsidized because the cost of production of the service is greater than what is paid for the tariff,” Kicillof siad. “That difference is paid by the government, and the problem is that the difference in the value of subsidies generate situations of inequality.”

Kicillof added that “if the entire cost were paid without the subsidy, there would be repercussions in people’s pockets and in the costs (of production) for companies, which has repercussions in productivity and the economy’s competitiveness.”

In fact, power distribution companies often bemoan that they cannot meet rising costs because power utility tariffs have remained practically frozen in Buenos Aires City and province since Néstor Kirchner came to power in 2003.

“What we are implementing... is a policy of growth and income distribution, because there are many differences throughout the country, and that’s why we are going to sustain subsidies for those who have the least and remove them from those who have the most,” Kicillof went on.

President Cristina Fernández de Kirchner’s economic strongman said that “those who felt ashamed” over receiving subsidies had been given the opportunity to renounce them willingly, which the minister proudly confirmed he had done, and which “many people did, too, but the great majority did not, and say they are (still) paying very little.”

According to the figures updated by the Federal Planning Ministry, 32,398 people have signed up to willingly withdraw from receiving subsidies for water, gas and electricity.

“I do not want to see them out on the streets protesting when they have to pay what they should,” Kicillof warned.

Falling reserves

Later in the day, Kicillof spoke to Radio América about export firms who “hoard exports... (and) make (the Central Bank’s foreign) reserves fall.”

“There may be few reserves, but there is plenty of soy,” the minister quipped, reiterating demands for farmers “not to spill over into a speculative process.”

CIARA and CEC, export chambers that represent a third of the sector, have been reporting increased rates of settlement, which ultimately has not sufficed to plug the hole for reserves that have continued to drop, albeit at slower rates.

“Soy is providing good news, because (prices) are rising,” he continued, recognizing that “in February, due to an agreement with the government, (exporters) sold very well” — they agreed a target of US$2 billion for the month.

Concluding the apparent carrot and stick, or good cop bad cop routine, Kicillof said the government is working with export firms to reach agreements for March and April.

Watching prices

Continuing his radio roadshow, Kicillof commented on the government-sponsored Price Watch scheme, describing the measure as a success and revealing that the Fernández de Kirchner administration is working on expanding it to other sectors.

Until now, the scheme has reached supermarket, pharmaceutical and metallurgic products, among others.

Although “not denying price movements,” he sentenced that “wages have remained above prices (inflation) for the last 10 years,” reducing opposition inflation figures in recent years to a competition in which “whoever said the highest (number) won.”

Herald with DyN, Télam

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