Last Friday, Treasury Minister Nicolás Dujovne presented in this year’s Budget Bill the government’s plan to reduce state subsidies in a variety of sectors. The reduction is intended to decrease the deficit and gradually reduce the state’s involvement in the economy.
Subsidies for public transportation will decrease 6 percent in 2018. As Clarín reported, this reduction from AR$104 billion to AR$98 billion will create an increase in ticket prices between 50 and 80 percent – meaning that the lowest fare would go from AR$ 6 to between AR$ 9 and $ 11 for buses, for example.
The last increase in ticket prices occurred in April 2016. Dujovne stated that “at the least we need to compensate for inflation”. The price increase accounts for a new push for multi-modal tickets – trips in which passengers use different permutations of public transportation to arrive at their destination.
Additionally, energy subsidies will decrease by 18.7 percent from AR$ 136 billion in 2017 to around AR$108 billion in 2018. The reduction will save the government $28.6 million. The government will largely maintain or increase social spending levels in 2018. Education spending will increase 22.3 percent, while social security will increase 21.7 percent, although those numbers mostly keep up with the inflation rate, so it’s not really a major increase in spending.
The government expects that public private partnerships in infrastructure will contribute to a projected GDP increase of 3.5 percent in 2018.
La Nación reported that the government’s announcement comes after news that in August, the primary fiscal deficit – the difference between current government spending on goods and services and revenue before calculating payment on the debt – was reduced by 30.4 percent in compared to the same month last year, or AR$24.65 billion.