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Argentina doesn’t have enough cash to continue paying for its people’s water and gas

March 27, 2014
March 27, 2014

Argentina is getting ready to make big cuts to federal subsidies, including those affecting the country’s energy, gas, and water sectors, reports local news outlet La Nación (link in Spanish). The government has vowed to continue providing aid in full to both its factories and poorest regions, which means small businesses and middle- and upper-class citizens are likely to be hit hardest by the cuts.

The announcement has been expected for weeks, but economy minister Axel Kicillof confirmed it today. The Argentine government doled out more than $16 billion in subsidies last year, a nearly 35% spike from the year before, according to La Nación. Roughly $10 billion of that went to the country’s energy sector. But the country’s quickly evaporating stockpile of cash is making it impossible to continue funding some 80% of basic services in the country. Argentina’s international reserves have tumbled by 34% over the past year, and by nearly 50% since 2011. Argentina-international-reserves-Reserves_chartbuilder Kicillof promised Argentinians that the philosophy of subsidizing services is still intact—”subsidies help grow disposable income, they help to encourage consumption,” he said this morning (link in Spanish)—while confirming that gas and water subsidies would be cut by 20%.

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