Unlock the Power of Knowledge: Your Ultimate Guide to Finding the Answers You Need

By Mauricio Cárdenas

There are problems that are so big that we prefer to ignore them, perhaps in the hope that things will improve over time. Something similar happens with bills that are difficult to pay. Many times we prefer to put them under the rug so we don’t have to think about them every day.

Something like this is happening with fuel subsidies, a bill of an unprecedented size, which only grows over time and which, of course, will not be resolved unless we do something different.

The figures are chilling. To put it in simple terms, the fact that we pay only 9,000 pesos per gallon – and not the 18,000 it actually costs – produces a bill estimated to be worth 37 billion pesos this year. A figure that is not insignificant, that is not very different from the annual operating budget of public education, including 300,000 teachers, public universities, feeding schools and everything else that goes into educating 10 million Colombians.

A problem of that magnitude must be solved. Using scarce fiscal resources to subsidize gasoline consumption, when they could be used to eradicate hunger and poverty, makes no sense.

Things are even worse when you think that the resources to pay this bill do not exist. Accounts payable this year and next fall into the category of extremely serious fiscal problems, the kind that could reduce our country’s risk rating once again, only when international markets are closed for emerging economies. obvious.

Therefore, this account must be removed from the drawer that nobody wants to open, pay and try to prevent it from happening again indefinitely over time.

The answer is as obvious as it is difficult: raise the price of fuel so that a regressive, inefficient and environmentally bad subsidy disappears. But let’s be honest, fuel subsidies are seen by governments as a lesser evil, compared to running the risk of protests and gatherings that destroy the political capital of any president.

If the desired technical solution is not feasible, we must think of alternatives that do the least possible damage.

The tax reform being discussed in Congress may be an opportunity for this.

The Fuel Price Stabilization Fund (FEPC) is the one that issues accounts payable, in this case to Epetrol, recognized with the international price for each gallon it produces or imports . Today, the FEPC has a debt of close to 28 billion pesos. And it is predictable that next year the figure will be similar.

The Government has proposed a new tax on hydrocarbon exports when the price is above a certain level. This tax should generate about 4 billion pesos annually, under current market conditions.

Congress would do well to allocate that tax to the FEPC. Once this fund has a guaranteed income, it can issue a bond, backed by what is collected in the future, thereby paying the outstanding account with Ecopetrol. That is, Epetrol pays the export tax, but at the same time receives what is owed by the FEPC.

The advantage of the debt issued by the FEPC is that it is not a debt to the national government, a technical aspect that is convenient in terms of complying with the restrictions imposed by the fiscal rule.

The reform must also establish a system of moderate weekly adjustments to fuel prices, which are greater for gasoline than for ACPM, until the gap with the international price is closed, in a period that will certainly take years.

And, to put all the cards on the table, the Government should also clear all doubts about the future of oil exploration. If the green light is not given to explore, there will be no exports and, therefore, no source to pay the fuel subsidy.

The entrance Answers It was first published in La Campana Newspaper.