BUENOS AIRES—Argentine President Cristina Kirchner, scrambling to reduce increasingly costly transportation subsidies, is trying to force the capital city of Buenos Aires to pay for the cost of subsidizing 33 bus lines.
The move, which is part of a broader bid to curb around 70 billion Argentine pesos ($16 billion) annually in subsidies of all kinds, would save the Kirchner administration one billion a year, according to a bill sent to Congress late Thursday.
The bill seems set to pass easily given the ruling coalition’s ample majority in both houses of Congress.
In January the government signed a deal with Buenos Aires City Mayor Mauricio Macri to hand over control of the city’s subway system. The agreement, which Mr. Macri recently said he would rescind, would make the city pay for 700 million pesos in yearly subsidies used to fund the subway.
Mr. Macri said the government’s failure to meet certain conditions of the deal, including a surprise government decision to withdrawal federal police protection from the subway, means the agreement is void.
After signing the accord, the city government raised ticket prices to 2.50 pesos from 1.10 pesos, saying this was necessary to keep the subway afloat and improve service.
Metrovias, a closely held company, has managed the subway through a government concession since 1994.
Analysts say the Kirchner administration is facing a cash crunch and needs to cut subsidies and raise ticket prices, which with a few exceptions have been frozen since Argentina’s 2001-2002 economic collapse.
But doing so carries political costs and critics say President Kirchner is simply looking for ways to make Mr. Macri, her top political rival, take most of the blame.
«The president is trying to foist blame for bad news on others,» Congressman Jorge Triaca, of Macri’s opposition Pro party, said in a phone interview. «She needs to be able to blame Macri for raising prices. For the president, the subsidies are both a cash problem and a political problem.»
A spokesman for President Kirchner couldn’t be reached to comment.
Mr. Triaca said taking over management of the buses wouldn’t be a big problem for the city.
«This simply changes who is responsible for the subsidies,» he said. «It isn’t a grave matter.»
A city finance ministry spokesman said the full fiscal impact of the transfer still needs to be studied.
Ratings analysts couldn’t be reached to comment on how the transfer could affect the city’s finances.
Indeed, cutting the popular subsidies could be a trickier challenge for President Kirchner, who postponed plans to raise train ticket prices after 51 people died and around 700 were injured recently in a commuter train crash.
The crash angered many Argentines and raised questions about the efficacy of the government’s complex subsidies system and the lack of transparency surrounding it.
Juan Pablo Schiavi, who resigned as Argentina’s transportation secretary earlier this week, had said train tickets would rise this month. But since the crash, the government has been largely silent on matter and it is now unclear when or by how much prices will rise.
Whatever the case, raising prices won’t prove popular either for the city or the federal government. And it is unclear if other hidden costs of maintaining the bus and subway systems might put pressure on the city’s budget.
Source: http://online.wsj.com/