Newly appointed Argentine President Mauricio Macri is continuing to revamp Argentina with more market-friendly measures in an attempt to jumpstart its economy, despite anger from its residents which has led to protests and a loud public outcry.
On Friday, Argentina announced that it is hiking prices for natural gas by up to 300 percent, which could save the government around $4 billion per year in its drive to cut subsidies, which was the driver of the largest fiscal deficit in nearly two decades in 2015.
After years of generous subsidies, Argentina’s government-controlled gas prices for residents, businesses, transport, and power plants were raised, according to a resolution that was published on Friday on the government’s Official Gazette.
The median increase in prices for residents and businesses in Argentina will be 174 percent, according to an Energy and Mining Ministry spokesman.
Also on Friday, Argentine motorists woke up and found themselves paying around 6 percent more for their gasoline at the pump, which added to another two previous increases this year amounts to 20 percent.
On Thursday the Argentine government announced that commuters in Buenos Aires would see a 100 percent increase in train and bus fares starting this month on April 8.
According to Argentine newspaper La Nacion, the government also plans to hike water prices by up to 500 percent.
The Argentine government says that subsidies have drained around $51 billion — nearly double its current foreign reserves — from the Treasury over the past 13 years.
On Wednesday after a 12-hour debate, Argentina’s Senate voted 54-16 in favor of a bill to pay holdout creditors, also known as “vulture funds”, and end a 15-year debt conflict.
The bill repeals the so-called ‘Lock’ and ‘Sovereign Payment‘ laws, and authorizes the government to raise $12.5 billion to pay holders of Argentina’s defaulted debt. The bill had been approved by Argentina’s lower house of Congress on March 16, and will now be sent to the President Macri to be signed into law.
The vote represented a triumph for President Macri, who has said that settling the long-running debt conflict was vital for the country’s economic future as it would end Argentina’s status as a “financial pariah”, and enable it to borrow at a more attractive rate of interest.
“Lack of access to credit has cost Argentina $100 billion and more than two million jobs that were not created,” Macri said during his speech before Congress on March 01.
Macri, who was elected in November and took office in December, has already reduced subsidies on electricity after hiking prices by up to 400 percent in a move which could save an additional $6 billion a year, reduced export taxes, scrapped trade and currency controls, alongside slashing the public payroll by firing as many as 200,00 public sector workers, is looking to cut the government budget gap by 1 percentage point this year and to nearly zero percent by the end of his term.
The broad revamp of Argentina led by Macri is aimed at attracting investors back to the Latin American nation and revitalize its economy following years of under investment that has led to a sharp downturn.