President Gustavo Petro announced an increase in the price of gasoline in Colombia, given the large deficit due to the subsidy for that fuel.
“Almost half of the national budget deficit (…) is produced by not raising the price of gasoline,” justified the president in a tweet.
Colombians pay for some of the cheapest gasoline in the Americas thanks to a fuel price stabilization fund, which covers the difference between oil prices on the international market and the internal value set by the government.
Without that subsidy, gasoline prices would hover around $4 a gallon, instead of the $2.5 they currently pay.
During the past administration of Iván Duque, the public rate was reduced due to the pandemic, but at a high cost to the state coffers.
“We tell gasoline consumers that we will return to the path of price growth, and that the objective will be nothing more than to reduce the irresponsibly accumulated deficit. We will not touch derivatives” of diesel, Petro said.
However, he did not anticipate how much the increase per gallon will be or when it will take effect.
According to the government, the deficit on account of the gasoline subsidy is 40 billion pesos a year, about 10,000 million dollars, which is approximately equivalent to 3% of GDP.
“Half of the national budget deficit is due to a growing subsidy to gasoline consumers. It is time for a national debate on the matter. Is it worth subsidizing gasoline for 40 billion when the infant mortality rate due to malnutrition doubles? “, wrote Petro, the first leftist president of Colombia.
Faced with the imminent adjustment of the price of gasoline, the government could face the first protests in a context of high inflation (10.8% in the last year).
The value of fuel directly affects the price of food, since almost all cargo is transported by road.
In countries like Chile (5.4 dollars), Peru (6.3) and the United States (4.8) fuel is much more expensive, according to the Colombian Ministry of Finance.