Compensation Expenditures Revealed: A Call for Rethinking Subsidies
The publication of the 2023 State Budget execution revealed a crucial missing element: the breakdown of compensation expenditures. This omission has been rectified with the publication of the execution report as of March 2024.
For the entire 2023 fiscal year, compensation costs amounted to 11,475 Mtnd, divided into 3,805 Mtnd for basic products, 7,030 Mtnd for fuels, and 640 Mtnd for transportation. This aligns perfectly with the forecasts outlined in the 2023 Rectificative Finance Law. As of the first three months of 2024, the numbers are already alarming, with a total bill of 1,389 Mtnd, comprising 999.6 Mtnd for fuels and 171.6 Mtnd for basic products.
Meanwhile, the Minister of Industry, Energy, and Mines has confirmed that fuel prices will remain unchanged this year. While this is welcome news for consumers, it puts a strain on the budget. We understand the executive's reasoning: in an inflationary cycle that has lasted a long time, tampering with prices would make control even more challenging. Moreover, oil prices are hovering around the estimates presented in the 2024 State Budget.
However, while we fully support the subsidy of food staples, the fuel subsidy could be revised. In just three months, we are approaching 1 billion dinars. This amount, paid in foreign currencies, could have transformed the daily lives of our hospitals, thousands of children in rural areas, and hundreds of young entrepreneurs lacking guarantees to launch their projects. This amount could have saved TRANSTU, which is struggling with liquidity issues. How can we justify subsidizing fuel for individuals who own vehicles while neglecting those who rely on public transportation, which is struggling due to a lack of means?
This is not about austerity, but rather about reallocating resources to more useful purposes. The timing may not be ideal, given the general pressure on prices, but this can be done gradually, over several years, with a clear trajectory and objective of approaching real prices. Even if we manage to claw back 2 or 3 billion dinars from subsidies and inject them into priority sectors or underfunded public entities.
This requires careful planning, which can also accelerate the energy transition. It's one of the tools that will push companies to anticipate a sustained increase in fuel prices and seek out cleaner electricity sources. It's time to think seriously about this.
