Subsidies to fuels will not be reduced in 2019

Ecuadornews:

The government plans to disburse $ 4,176 million. The Deputy Minister of Finance informed that there are still no dates to analyze a possible targeting. The announced targeting of the subsidies that the State gives to fuels will remain on hold.

Thegovernment decided that next year will not eliminate or reduce existingsubsidies in diesel, extra gasoline and liquefied petroleum gas (LPG). This wasstated by Fabián Carrillo, Deputy Minister of Economy and Finance.

On August 21, the elimination of the subsidy for super gasoline, reduction in industrial diesel and the opening of dialogue tables to focus the remaining subsidies were reported. The first measure came into effect on the 27th of that same month; the second was implemented from September 14, and the third did not pass the announcement.

Now Carrillo said that “the subsidies are not going to be touched, however, the spirit of dialogue and of opening a social discussion at a national level” is maintained with respect to the amount that will be allocated the following year to cover this item.

Thebudget pro forma of 2019 allocates a total of $ 4,176.47 million for fuelsubsidies.

They are $ 2,469.43 million more than contemplated for 2018, whose budget in this area was approved with $ 1,707.04 million. The increase is mainly in the reference price of a barrel of oil, explained the official, because in 2018 it was calculated at $ 41.92, while for 2019 it was set at $ 58.29.

Throughout the current year, Ecuadorian crude has been commercialized at an effective average of $ 61 per barrel; at the same time, the import of derivatives has become more expensive due to the fact that international prices have risen above expectations.

In that sense, the projection of the fiscal proforma, in process in the National Assembly, is based on those prices, said Carrillo. The main variations are found in diesel and naphtha.

The 2018 budget estimated $ 1,158.21 million for both products, but the new proforma presents $ 3,235.07 million. Targeting subsidies has been a recurring recommendation of analysts and private sectors to reduce public spending, reduce contraband and open up prices.

Withthe elimination of the super subsidy and reduction to industrial diesel,savings of $ 42.7 million per year are expected. And by 2019 they projectedaround $ 120 million. (I)

Source: https://www.eltelegrafo.com.ec/noticias/economia/4/subsidios-combustibles-ecuador