Industry's stakes high in Argentina

摘要

RECENT figures on the growth of poverty in Argentina make grim reading, but the data also show the difficult situation in which President Mauricio Macri finds himself ahead of October's general elections. For business generally, and the oil industry in particular, Macri remains the best bet to tackle the structural problems facing a country that has swung between over-zealous austerity- achieved primarily through excruciating dollar parity - to the worst excesses of populism, bringing fiscal laxity and subsidies. Macri has done his best to tackle underlying problems with price liberalisation, but stubbornly high inflation and economic recession have left the administration in a political straitjacket. The latest attempt to square this circle came with the news that the administration will cushion customers from its own commitment to increase natural gas prices by phasing the 29% hike over the second quarter of 2019. In theory, gas producers will get the full increase, leaving the government to subsidise the difference, but the industry has not forgotten the difficulties that the administration has faced in funding its own price incentives for unconventional gas production.