Former Finance Minister Mario Marcel criticized the government's handling of rising fuel prices and proposed doubling Mepco's adjustment cap, according to BioBioChile. He made the proposal during a discussion at the Center for Public Studies (CEP), a private think tank in Santiago dedicated to public policy analysis.
Mepco, or the Fuel Price Stabilization Mechanism, acts as a buffer. When global oil prices rise or fall sharply, the system spreads that change over time so it does not reach the pump all at once. That cushion comes at a cost to the Treasury.
According to Marcel, the key would have been to keep the mechanism active, but with wider limits. "I would modify the adjustment limits a little, because with the current cap of 30 pesos per liter, the change was going to be too slow," he said.
He calculates that raising that limit to $60 per liter would have prevented sharp increases while reducing government spending. "We would have been well below the 300-odd pesos, reducing the fiscal cost and giving people time to adjust," he said. Think of it as paying off a debt in larger installments, but without a single payment that leaves you struggling to breathe.
To support his idea, the economist recalled 2022, the first year of Gabriel Boric's government, when the war in Ukraine sent oil and food prices soaring. "We faced a similar situation," he said, adding that they also had to make a major fiscal adjustment at the time.
Despite that situation, that administration decided to bear the cost of Mepco. Marcel maintained that fiscal consolidation still progressed and that public spending fell by 23% that year.
The former minister also discussed the effect of gasoline prices on household sentiment. In his view, people judge the economy by the prices they see daily, rather than by economic activity or employment figures, unless employment enters a crisis.
"What people understand as inflation is not the CPI, but certain emblematic prices. The most common worldwide is fuel," he explained. The CPI, or Consumer Price Index, is the official measure of inflation calculated by the National Statistics Institute.
Marcel therefore concluded that a sharp jump in prices at gas stations directly affects families' economic expectations. The source does not detail how the government responded to these criticisms.
