The agreement with the International Monetary Fund (IMF) establishes that, gradually, the fuel subsidy will be reduced over the coming years.
In 2024, the reduction should be $408 million and everything points to the extra and eco country; but in 2025, the subsidy must be reduced by an additional $786 million and that will only be possible by touching diesel.
The reduction of fuel subsidies is one of the key issues of the agreement financing signed by him Government of Daniel Noboa with the International Monetary Fund (IMF).
Contrary to what Government spokespersons have said, from the president to the Energy Minister in charge, the commitment to the multilateral organization is to gradually dismantle not only the subsidy for extra gasoline and eco-country; but also go for diesel.
According to the former Minister of Economy, Fausto Ortiz, the corrections or reductions in the subsidy should occur especially between 2024 and 2027. “We would go from more than $3,200 million to less than $1,000 million in 2027,” he pointed out.
Thus, in 2024, the adjustment would be around $408 million related to the extra gasoline and eco-country subsidy. He Minister of Energy and Mines in charge, Roberto Luquehas said that the liberalization of the price of these two gasolines and compensation for certain sectors such as taxi drivers, rural passenger transport vans and outboard motors, among others, are being analyzed.
The measure must be taken in the second half of 2024 and would cause a saving of more than 64% of the $631.08 million budgeted for the subsidy of the extra and the eco country throughout this year. Without a subsidy, both extra and eco-country, which currently cost $2.40 per gallon, would go to more than $3 per gallon.
In 2025, an additional fuel subsidy reduction of $786 million must be added to the $408 million saved in 2024. This goal, according to Carlos Rivas, a petroleum engineer, will not be achieved unless the dieselwhich represents an annual expense of more than $1.5 billion.
»Whether Daniel Noboa is re-elected, or if another person reaches Carondelet, from 2025 he will have to face the tough challenge of touching the diesel subsidy and seeking adequate compensation to avoid protests and instability,” Rivas noted.
In 2026, another additional reduction of $973 million must be made. The adjustment would be $95 million in 2027 to reach the goal of having fuel subsidy spending of less than $1,000 million per year when the financing agreement with the IMF ends.
In 2028, this subsidy expenditure should be $880 million, which would include gas (with full subsidy for all) and compensation to specific sectors.
The Noboa Government has not ruled out using mechanisms such as the price band (established by Moreno and repealed by Lasso) to gradually adjust the price of fuel. (J.S.)
By: LA HORA Newspaper