The decision of the Government of Lopez Obrador to avoid at all costs a rise in the price of fuel is already taking its toll on the collection figures. Since last March, the federal Administration decided to waive the collection of the Special Tax on Production and Services (IEPS) on gasoline as a measure to cushion inflation in the country. The measure, however, has not managed to completely stop an escalation of prices in the country, which already exceeds 8.7% at the annual rate and has generated an accumulated deficit, from January to July, of more than 56,800 million pesos. in the collection of the tax, according to the figures of the Ministry of Finance. Specialists warn that the fuel subsidy implies a greater risk of indebtedness and fewer resources for other areas such as health or education. In sum, the Government has spent almost 293,000 million pesos on gasoline incentives.
Despite the gap in public finances, the Mexican government has reopened the key to gasoline subsidies. After weeks in which it had reduced the fiscal stimulus, the Ministry of Finance reported that the fiscal stimulus for consumers of magna fuel, which is the most popular on the market, went from 73.22% to 73.36%, while In the case of premium gasoline, the government subsidy rose from 53.64% to 60.69%. Diesel continues to be 100% subsidized, that is, the IEPS fee will be zero pesos. The measure began on September 17 and will continue until next Friday.
Mariana Campos, coordinator of the Public Expenditure and Accountability Program of Mexico Evalua, points out that there is no consistency in the policies of the Federal Administration when it has only focused on adjusting the price of fuels, but not that of other energy sources such as gas or electricity. “It seems terrible to me that gasoline is being subsidized because it is a subsidy that benefits people with higher incomes in Mexico and other social impact programs such as health care for people without security are being stopped. society, the most vulnerable people. If we stop subsidizing fuels, inflation is going to continue because it is not the complete answer,” she adds.
For 2023, the Government estimates a gasoline IEPS collection of 278,000 million pesos, an increase compared to the negative closing that is expected in the year, of a deficit of 83,000 million pesos. “The above would only be possible with a drop in oil prices or the end of the gasoline stimulus policy, which is unlikely in the year before the federal elections,” the agency emphasizes.
Campos adds that there is a high risk that next year the debt will be the only source to cover this gap in public finances. “The Government’s bet is too optimistic when forecasting economic growth of 3%, on the other hand, inflation is expected to close next year at 3.2%, so how is the Treasury covering itself, asking for a high debt, this is where I see the inconsistency, if things are going so well, why are you raising a historical amount of public debt? That’s why he’s asking for a fairly generous debt ceiling,” he says. In the draft Budget for next year, the Government’s net indebtedness will be 4.1 points of GDP, the highest since 2014.
The economist Rodolfo de la Torre, from the Espinosa Yglesias Study Center, warns that the gasoline subsidy policy at the expense of the health of public finances could continue until the first months of 2023. “It is a significant loss of fiscal resources, this would impact the public deficit. The gasoline subsidy ends up benefiting the richest people and with a greater amount, ”he points out.
At this time, oil prices continue to rise because OPEC and its allies continue to produce less than agreed. With the price of a barrel of oil on the rise and runaway inflation, President Andres Manuel Lopez Obrador has maintained his position of warding off an increase in fuel prices at all costs and with it a feared, gasoline.
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Source: EL PAIS
