OPC 5 Public Sector Budget 5 BUDGET BILL 2021 – ENERGY AND TRANSPORTATION SUBSIDIES

BUDGET BILL 2021 – ENERGY AND TRANSPORTATION SUBSIDIES

October 16, 2020

Next year’s projected expenditure on energy and transportation subsidies amounts to AR$805.8 billion, which is equivalent to 2.2% of Gross Domestic Product (GDP), at the same level of that foreseen for 2020. Of these funds, 77.4% is allocated to subsidize the gas and electricity sector, and 22.6% to transportation.

  • Since 2017, energy subsidies have grown 0.5% of GDP and in 2021 they will be at 1.7%, same as this year. The highest record was in 2014, with 2.8%.
  • The most significant allocations are for the electricity sector, with AR$446.6 billion foreseen in the Budget Bill for 2021, a real increase of 4%.
  • Users will face 43% of the estimated cost of electricity next year, a level comparable to that of 2016.
  • The energy deficit in the last decade averaged USD2.98 billion, contrasting with the trade surplus of that time.
  • A total of AR$71.7 billion will be allocated in subsidies to natural gas supply, which implies an increase of 5.3% with respect to the expected for 2020.
  • A rise in subsidies to natural gas demand is also foreseen, including a higher subsidy to liquefied gas cylinders.
  • Transportation subsidies would remain at 0.5% of GDP, with an increase for motor vehicles and a cut for trains.
  • Travel on working days will increase 200% and the AR$12.7 billion to finance social fare implies a drop in real terms of 17.7% in relation to the expected for 2020.
  • In the last months, 91% of the costs were covered with subsidies and the passenger load factor was 5%.
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