During the session of the block heads of the Congress of the Republic, pro-government deputies presented the bill that seeks to implement a subsidy of Q12 per gallon of diesel and Q3 per gallon of regular gasoline as emergency measure given the volatility of the price of a barrel of oil in the national market.
The project, identified with number 6801, Law of Temporary Emergency Support for Consumers of Diesel and Regular Gasoline, entered the Legislative Directorate and began the process of seeking agreements and consensus between the political blocks.
The Executive’s proposal, presented this Monday, July 27, proposes an internal budget readjustment for Q1,754 million, in addition to a budget expansion for the same amount, which would raise the ceiling of the current General Budget of Income and Expenditures of the State to Q170,469 million.
The amount destined to finance the state subsidy would be Q3,480 million.
The initiative was only known during the meeting of the block heads. If agreements and consensus are reached between the groups, it could be known this week by the plenary session of Congress under the national emergency procedure.
Subsidy would be financed with cuts and expansion
The bill establishes a reduction of Q474 million, made up of cuts in different budget spaces: Q216 million corresponding to the Payment Agreement for Emissions Reductions (Erpa, for its acronym in English); Q170 million from the Ministry of Agriculture, Livestock and Food; Q50 million from the Ministry of the Interior; Q9 million from the Ministry of National Defense; Q5 million from the Ministry of Culture and Sports, and Q4 million from the Ministry of Environment and Natural Resources.
Design by marlon boryo
The initiative proposes financing the subsidy through a budget increase of Q1,754 million, a reduction of expenses of Q474 million, and Q1,280 million from surplus resources. for a total of Q3,480 million.
That is the amount that would be allocated to the budget of the Ministry of Energy and Mines (MEM), according to the proposal.
The initiative indicates that, on the income side, Q400 million assigned to the Directorate of Priority Road Projects (Dipp) would be reduced, in addition to using other unexecuted balances.
Erick Coyoy, analyst at the Association for Research and Social Studies (Asies), pointed out that the proposal combines a budget expansion with transfers between items.
“The sources of income to finance the expansion of expenses, as indicated in the Constitution, are not clearly identified,” he stated.
Congress evaluates changing subsidy distribution
The president of Congress, Luis Contreras Colindres, emphasized at the end of the session of the block heads’ instance that some modifications to the initiative presented by the Executive are already being proposed. One of them is to reduce the amount of the diesel subsidy and increase the amount allocated to regular gasoline.
He argued that more than 50% of the active vehicle fleet in Guatemala is made up of motorcycles, which consume regular gasoline mostly, so an adjustment to the proposal will be analyzed when they become known.
Deputy Nery Ramos stated that they hope to reach consensus to begin the debate on the bill, after learning of its presentation.
For his part, deputy Orlando Blanco, member of the Public Finance and Currency Commission, explained that, if the ruling party achieves the necessary agreements and votes, the project could be known in the session scheduled for this Tuesday and even be known without an opinion.
The proposal combines a budget expansion with transfers between items.
He recognized that, since it is a budget expansion and if approved by the Plenary, the general budget would go from Q168,715 million, currently in force, to Q170,469 million.
“President Bernardo Arévalo said on Friday that it was a budget readjustment and not an expansion, as he presented it,” Blanco considered.
Subsidy will include measures against smuggling
The head of the Ministry of Energy and Mines (MEM), Erwin Barrios, described the Executive’s proposal as the most effective, because it is based on administrative procedures that were already applied during the previous subsidy, valid from April to July. He added that the portfolio is already prepared for its implementation and that the time to transfer the benefit to consumers would be less, although it will depend on Congress knowing and approving the initiative.
He added that the proposal incorporates new provisions to strengthen control in the implementation of the fuel subsidy. Among them is the prohibition of removing fuel from the country to which the subsidy has been appliedas well as the establishment of border controls to prevent smuggling.
The other change, the minister explained, is that the subsidy may be suspended before the scheduled deadline if international fuel prices register a significant reduction.
He explained that, after the end of the previous subsidy in July, MEM officials filed 15 complaints with the Public Ministry against service stations that increased fuel prices when the end of the benefit was announced, even though they still had inventories acquired with the subsidy, according to verification of purchase invoices.
In April of this year, Congress approved a temporary support program that provided a subsidy of Q8 per gallon of diesel and Q5 per gallon of premium and regular gasoline, for which it allocated Q2 billion. This measure was financed through an internal budget readjustment.