The president of Colombia announces that he will raise the price of gasoline

First modification: 09/13/2022 – 05:51

An unpopular move. Gustavo Petro, the Colombian president, announced this Sunday that the price of gasoline will increase in the country due to a “fuel price stabilization deficit” inherited from his predecessor, Iván Duque.

“The fuel price stabilization deficit due to non-payment by the previous government is 10 billion (pesos) per quarter (about 2,300 million dollars). That is, almost 40 billion annually (about 9,200 million dollars). Almost half of the national budget deficit. It occurs by not raising the price of gasoline,” Petro explained on Twitter.

The Fuel Price Stabilization Fund, FEPC, which reports to the Ministry of Finance, seeks to stabilize the cost of hydrocarbons by paying producers and importers the difference between international prices and those on the domestic market.

This in order to mitigate the impact of the volatility of the price of gasoline in international markets that it may have on Colombian consumers.

Gas or food?

Petro added that “half of the national budget deficit is due to a growing subsidy to gasoline consumers” and wondered if it is worth subsidizing this fuel “when the infant mortality rate due to malnutrition doubles.”

“The other side of not raising gasoline and increasing the fund’s deficit is allowing hunger and poverty to increase in Colombia. I propose to Congress to separate the collection of taxes on gasoline from the indexation of the price of gasoline to mitigate the impact on the consumer,” he said.

For this reason, he announced “to gasoline consumers” that Colombia will resume “the path of price growth and that the objective will be nothing more than to reduce the irresponsibly accumulated deficit,” although he clarified that “derivatives of ACPM (diesel) will not be affected. “.

“Congress can advance the debate on the structure of fuel prices and their indexation with international oil prices, which includes the purchase of oil that (the state company) Ecopetrol makes within the country at international prices,” he specified.

Previous government defends itself

José Manuel Restrepo, former Minister of Finance, who held that position between 2021 and 2022, responded to Petro and said that in the Medium-Term Fiscal Framework it was clear that the previous government paid “14.2 billion pesos (about 3,263 million dollars) of the deficit before leaving” and left “28.5 billion (about 6,549 million dollars) budgeted, as well as other sources of payment”.

“During the pandemic, having guaranteed fuel price stabilization prevented inflation of an additional five percentage points and thereby affecting the most vulnerable and the recovery of the country’s MSMEs. Similar processes followed many countries around the world,” explained the former minister.

According to him, the Duque government proposed and set in motion “an orderly, gradual and careful process of response to this reality”, which was reflected in the budget “with short and long-term measures”.

For Restrepo, during the transition of power left by the previous government “there is material to ‘build from what was built’ and take a step forward in compliance with the fiscal rule, without affecting the vulnerable or economic recovery.”

with EFE