Following the latest increase in fuel prices, four economists analyzed the government's measures in response to high international oil prices on the program El Primer Café, according to Cooperativa. Opinions were divided between those who support the strategy and those who criticize how it was initially implemented.
Eduardo Guerrero, director of Ideas Republicanas, the Republican Party's think tank, argued that "the government is doing everything that is fiscally possible" in response to the oil shock. He attributed the increase to wars in the Middle East, Russia and the destruction of refineries worldwide.
Guerrero also warned that when economies fail to let prices reflect actual costs and maintain subsidies, economic actors end up making poor decisions and governments take on excessive debt.
Cecilia Cifuentes, of Libertad y Desarrollo, cited the World Economic Outlook, the International Monetary Fund's economic outlook report. According to her, its recommendations align with the government's actions, because failing to pass on the increases amounts to a regressive subsidy that largely benefits higher-income groups.
The economist argued that the recommended approach is to pass on the increases and support the most vulnerable with targeted subsidies. Given the current fiscal situation, providing broad subsidies "would be bread today and hunger tomorrow," she said.
Rodrigo Wagner, an academic at Adolfo Ibáñez University, focused on diesel. He explained that oil prices are high, but that diesel is "brutally expensive," with a large gap relative to crude oil.
Wagner estimated that around 90 pesos is currently being passed on, compared with the 400 pesos that should be passed on. In his view, this shows that "it was a terrible idea to pass everything on in one blow," which frightened people.
Former Finance Minister Nicolás Grau recalled that the initial aim was to provide no subsidies and that some subsidies are now being provided. "It was said to be impossible; now it is said to be possible," he noted, adding that the difficult part was deciding how much and how to achieve a softer landing.
For Grau, the initial strategy of passing on the full cost affected not only individuals but also businesses and logistics chains, with a very large impact on the economy. Cooperativa's report does not specify the exact amount of the latest increase or the government's specific measures.
