The National Government committed in the agreement with the International Monetary Fund (IMF) a process of eliminating subsidies to energy service users that will fully affect the average sectors of the populationsince the needs of low -income a social rate will be launched while high income already pay the real value of the energy they consume.
While this subsidy reduction will be gradual, as reaffirmed in the staff report released after the announcement of the new understanding, the magnitude of the increase in gas and electricity rates It should be from at least 45% of what a residential user pays todaysince that is what is covered by the final bill on the account of the national state, while the remaining 55% is in charge of customers.
Is that the idea analyzed in the Ministry of Economy is Eliminate tariff segmentation implemented by the government of Alberto Fernández, and move on to a scheme in which all users pay the total invoice without subsidy. In cases where households that cannot face this load, aid will be implemented through a social rate with income ceilings and consumption stops to be determined.
As the sectors of the population of higher income already pay practically the real cost of energy with consume, it will be the members of the middle class that today identify as N3 those who will see the Greater impact of the new schemeofficial sources explained that assured that the government has been working on that reduction anyway through a progressive table.
Tariff segmentation, dollar and energy cost
The key will be to determine at what time this subsidies are going to be applied, considering that there are other aspects that will influence the cost of energy such as the exchange rate sliding From the opening of the stocks, which has an immediate effect on gas and electricity costs since they are historically dollarized values, so it will have to be seen where the dollar is stabilized.
A phenomenon in favor, on the other hand, is that the energy cost It also has been decreasing by the effect of replacing natural gas imports due to the greater production capacity of Vaca Muerta, which is much more competitive than the Bolivia fuel that was imported until the end of 2024 or the LNG cargoes that come in retraction year after year, so there is a lot of uncertainty about the final effect of the equation.
The truth is that with the bonuses in the price of electric energy granted to segments N2 and N3 in March, the cost coverage of the electrical system for the residential category indicates that, on average, on average 54% contributes the user via rates While 46% of the cost is provided by the national state, that is, what would be removed as a result of the agreement.
In the case of gas, with the new Pist gas prices, and the bonuses granted to the same segments N2 and N3, the coverage of fluid supply costs indicates that on average the residential user pays 55% while 45% of the cost of supply is covered by the national state, that is, parameters very similar to that of the electrical market.
The seven keys for subsidies of the agreement with the IMF
Efforts in reducing subsidies seek to improve the efficiency of public spending, reduce distortions in the energy market and guarantee that these contributions reach those who really need them. These goals should reflect a commitment to the efficiency of the use of resources and the transition to a more sustainable and competitive energy system.
The main points that will have to observe from now on for the agreement with the fund include:
1. Subsidy reduction: It was decided to add measures to reduce energy subsidies, prioritizing the elimination of those not focused and adjusting rates to reflect real costs, especially for households for higher income and commercial users.
2. Progressive elimination: A continuous decrease in energy subsidies in the coming years is projected, with specific goals for 2029 and 2030.
3. SCHEME SYMPLIFICATION: A comprehensive review of the energy subsidies scheme is sought, replacing complex segmentation with a single subsidy for low -income households.
4. Transition towards real costs: Regulated prices, such as energy and transportation, are adjusting to approach real costs, today reaching a recovery level of 80%.
5. impact in the budget: Subsidies reduction is part of an effort to rationalize public spending, improve fiscal sustainability and release resources for priority areas such as infrastructure and social programs.
6. Electric market reform: A series of reforms are planned to improve competition in the wholesale electricity market, normalize its operation and promote investment.
7. FIDUCIARIOS FOODS: It is planned to close extra-proven and inefficient fiduciary funds, maintaining only the fund for residential gas subsidies.
Fiscal commitment in projection to 2030
In 2024, subsidies to the energy sector were US $ 6,252 million, 35% less than a year earlier and its impact on GDP was 1%considered the lowest level since 2009. While in 2014 the energy subsidies represented 12.1% of the primary expenditure, in 2024 that incidence was reduced to 6.5%, according to the economy and energy consultant.
Between January and March 2025the downward trend continued and the subsidies were $ 370 million, that is, 44% less than in the first quarter of last year. In similar conditions to those of the start of the year, it was projected that in 2025 the total subsidies of the sector will drop Au $ 433 and would represent 0.7% of GDP, the lowest level since 2007.
But now, the Government agreed with the IMF to deepen the reduction of spending and among other items finish attacking the subsidies. Thus, according to the document released by the IMF, according to a Progressive reduction criteriaenergy subsidies are expected to decrease significantly in the coming years to reach 0.2% of GDP in 2029.
Regarding targeting in Vulnerable homesthe strategy includes only a specific subsidy for low -income households, in a reduction that is part of a broader effort to rationalize public spending and improve fiscal sustainability.
As part of that reduction path, the government is pending to publicize the result of the Quinquenal Review or RQT, which would define an increase around 10% but divided into a series of fees over the next 12 months, in addition to recognizing a monthly update system following the inflationary rhythm and salary evolution.
