2024-08-31 18:26:35
Starting today, August 31, the price of a gallon of diesel will increase by $1.904, according to resolutions presented by the Ministries of Mines and Energy and Finance. This adjustment seeks to address the growing deficit generated by the Fuel Price Stabilization Fund (Fepc), which has put the Government in a difficult economic crossroads.
The diesel subsidy, which until now has served as a temporary relief for several sectors, has become unsustainable. In 2023, three out of every four pesos of the Fepc deficit were allocated to this subsidy, which has caused the projected deficit for the end of 2024 to reach $10.2 billion, a significant burden on the General Budget of the Nation.
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Finance Minister Ricardo Bonilla had anticipated that an increase in the price of diesel was inevitable, which generated tensions with transport unions, who peacefully demonstrated on August 30 against the measure. However, the government defended the increase, highlighting that when a consumer buys diesel at a service station, he pays less than 50% of the real price, with the rest covered by the Fepc. This subsidy has resulted in a fiscal accumulation of close to $115 billion, which puts the country’s fiscal and macroeconomic stability at risk.
“100% of the Fepc deficit in 2024 corresponds to diesel. This situation is unsustainable for the nation and could compromise Colombia’s fiscal viability,” the Ministries said in a statement. They also noted that fossil fuel subsidies are incompatible with the goals of the energy transition and the decarbonization of the economy.
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The $2,000 increase in the price of a gallon of diesel, which translates into a $1,904 increase in the retail price, is expected to have a limited impact on inflation, raising it by 0.3 percentage points by the end of 2024. At the same time, the adjustment would generate fiscal savings of $1.6 trillion, alleviating part of the burden on the national budget.
The increase, while necessary according to the government, has raised concerns in sectors such as transport, which are heavily dependent on diesel. However, authorities insist that the adjustment is crucial to ensure long-term economic sustainability and meet the country’s environmental commitments.