Development: On 2 May, Argentina's cabinet chief, Marcos Peña, said President Mauricio Macri would veto a bill that is being promoted by the opposition in the natioinal congress that seeks to stop increases in natural gas and electricity tariffs.
Significance: Since he first came to power in December 2015, the centre-right Cambiemos coalition government led by Macri has been gradually moving to reduce the generous gas and electricity subsidies implmented by the previous administration led by Cristina Fernández (2007-2015). But Fernández and her allies in congress threatened to challenge the sharp tariff increases through a new bill. The initiative comes amid mounting opposition to the tariff increases, including a series of protests staged earlier this week on International Labour Day.
- The opposition has drafted a bill to freeze gas and electricity tariffs for the next twelve months and guarantee that any subsequent increases could not rise more than salaries. It is backed by factions of the main opposition Partido Justicialista (PJ, Peronists) party including Federal Unidos por una Nueva Argentina and the Kirschnerista block Frente para la Victoria. It could go to the floor in the chamber of deputies as early as next week.
- Peña said the government would veto the initiative if it was approved by congress. He urged Peronist governors who already broke with Fernández to block the proposal before it gets to that point. Doing so would be in their interests, he argued, because any failure to increase utility tariffs would cost the federal government some Ar$225bn (US$10bn) per year, which would eventually impact on the governors’ budgets.
- “We do not want to pave the way for the kind of demagogy that could jeopardise Argentina’s development,” Peña argued. He added that the federal government had already made a series of concessions and there was no more wiggle room.
- Higher gas and electricity tariffs have also fuelled high rates of inflation, which has increased the cost of living. During the 1 May protests, some demonstrators held candles to show solidarity with those who could not afford to pay for electricity in their houses any more.
Looking Ahead: Macri is under pressure to defend his economic reform agenda and tame stubbornly high levels of inflation. But he insists that increasing utility tariffs is preferable to other economic measures such as shock austerity tactics.
