The UIA industrial lobby yesterday hailed a government decision to eliminate a number of subsidies as a step in the right direction and said that their scrapping, aimed at trimming public spending amid the global crisis, will “not necessarily” lead to higher public rates, adding that the government had invited it to discuss the measure over the coming days.
UIA head José Ignacio de Mendiguren said that Roberto Baratta, the under-secretary of coordination and administration of the Federal Planning Ministry had called him to a meeting in the coming days.
De Mendiguren said that, although he didn’t have details of the measure the administration announced this week for next year, “we consider it a step in the right direction.
“Subsidies are an economic policy tool, but they are good depending on how they are distributed and they cannot be permanent either.”
De Mendiguren said the UIA would discuss the issue this week before attending the meeting. He made remarks after returning from Cannes, France, where he accompanied President Cristina Fernández de Kirchner to the G-20 meeting.
Asked whether he considered that the elimination of subsidies will lead to higher public rates, he said: “We will see. That is a possibility, although it should not be necessarily so.”
The government announced the elimination of some subsidies in an effort that reportedly will save it 600 million pesos. It will create a commission in charge of analyzing which subsidies to companies or individuals will remain in place, which will be modified, and which will be scrapped.
Opposition leaders had warned that the government had been delaying crucial economic measures until after the October 23 election in which Fernández de Kirchner won a new four-year term by a landslide.
Still, Deputy Miguel Ángel Giubergia (Radical-Jujuy), vice-president of the Lower House’s Budget and Finances Committee, said that “beyond the mise-en-scène” of Economy Minister Amado Boudou and Federal Planning Minister Julio De Vido, the government will actually eliminate “less than one percent of total subsidies.”
“This year 70 billion pesos will go to subsidies. That is six times the amount of funds that go to the child subsidy.”
In the first nine months of the year nearly 52 billion pesos were granted in subsidies, 58 percent more than in 2010, Giubergia said. He added that nearly 90 percent went to the energy and transport sectors, with the CAMMESA state wholesale power market administrator and the state energy company ENARSA having been the main recipients (31 billion pesos, 74 percent more than in 2010) while the transport sector received 14.5 billion (60 percent more than in 2010).
Separately, De Mendiguren said that, unlike other years, more than half of this year’s G20 meeting was devoted to the Greek crisis. He praised Fernández de Kirchner saying that “while the President was already reading chapter XXI, the rest were still reading the foreword.”
Source: Buenos Aires Herald