“The subsidies have already become a fiscal hole, while the increase in fuel prices continues”: Hugo Maúl

The possibility that in the future the so-called temporary support to maintain the prices of oil derivatives in the local market will continue, is already viewed with concern by the economic analyst Hugo Maul, from the Center for National Economic Research (Cien).

This year, the government has allocated Q3 thousand 181 million to subsidies due to increases in fuel prices and there is no way that the international price of a barrel of oil reflects a decrease, indicated the analyst, who provided a perspective on this issue. in connection with the political campaign.

How should the issue of subsidies for petroleum derivatives be addressed?

The most important thing is to adopt a medium and long-term perspective. Discussing the efficiency of the subsidies is useless at this time, because the theory would indicate that these should be focused and temporary for the most needy population, but those that were approved do not have that characteristic because they were general and do not necessarily go to the most poor because those who consume diesel and gasoline already have access to a means of transportation.

What implications does this practice have?

If these subsidies are maintained permanently, fiscal sustainability is at risk.

The question that remains is whether the Ministry of Finance evaluates the fiscal risks and the threats represented by maintaining this type of subsidies.

When one looks at the history in the region and only with what is happening in Honduras, especially in the electricity sector, subsidies can represent a fiscal hole, for which reason it would be necessary to have a strategy to reduce the risk, which is related to with reducing other expenses or looking for how to increase taxes and there is no way out.

Perhaps I am pessimistic, but if they are going to leave them, and if we assume that they will stay forever, let’s readjust all public finances to make it sustainable. As long as this possibility is not recognized, for now they have already allocated more than Q3 billion.

Do you perceive a fiscal risk scenario?

If there is going to be a permanent fiscal hole, the Fiscal Analysis Directorate has a great obligation to measure the risks. In Honduras, the fiscal deficit caused by the subsidies and the deficiencies of the system is equivalent to 1% of the gross domestic product (GDP).

It would be better to assume the worst scenario and assume that if these supports are not going to be removed in the medium term, we really have to start assuming the size of the bill to be financed, because probably when that is put before our eyes, surely decisions can be made with a long-term vision.

In appearance, as it is in “pushitos” It does not worry us and I perceive that we are lethargic due to the fact that it is supposedly transitory.

This issue is very broad and that is why it is necessary to think about what is going to be done with public transport, road infrastructure, planning and that will show that there are no economic conditions or political capital to be able to undo the subsidy.

Do you think that the subsidies will be extended as the election year approaches?

In political terms, I believe that there are incentives to grant a subsidy again, above all, from a government that is already on its way out and its political capital in a third and fourth year has worn out.

It must be understood that the carriers who have been protesting do so in their own name, but in a certain way they also reflect the sentiment of a large number of the population that does not participate in this fight, because they know that if this battle is won, they can provide other types of subsidies for other consumer goods, and that is the problem of poor countries that do not generate income or employment.

There are two flavors here: either we assume that these things are permanent and analyze how big the blow will be to readjust the public budget or simply that it is not granted and see what is done to contain the problems that arise.

I think that neither of the two has been done and it is like a fever, which is thought to pass, and people deny the reality that this is only a symptom of a serious illness. A scenario building exercise is necessary.

What attitude should economic agents assume?

Those who receive this “gift” from the government will be happy to take it, so the biggest challenge facing the presidential election will be to distinguish between the political offer and who is talking seriously about these issues. This is because it is not sustainable for someone to come up with a policy that promises to maintain the subsidies indefinitely.

Whoever offers that says how it will be financed, which is the most concrete action that can be taken in view of the new election, and where the resources will come from.

The blockades of carriers are generating conflict…

With this blockade, the carriers are “shooting themselves in the foot” because stopped trucks do not generate freight and if other carriers cannot pass, they will not generate services either. There is a limit to what they can oppose, before their pockets are affected, unless the situation is completely untenable and they are operating at a loss.

If you were responsible for finding a solution, what would you propose?

I would ask the president to convene a council of ministers, to grab the bull by the horns and to transfer the population that this is not transitory, so the problems of road infrastructure and cargo transport must be solved, because the speed circulation in the country is slow, which increases the kilometer/ton cost due to high fuel consumption.

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