In 1999, government spending on subsidies was $13 million, a figure which has multiplied 30 times, reaching $471 million in 2012.
In an event organized by the Salvadoran Chamber of Consulting Firms (Camsec) and the Union of MSMEs, union president, Jorge Daboub, revealed that while in 1999 the country spent $13 million on payments of subsidies, specifically for liquefied gas oil, by 2012 they had increased to $458 million, which represents an increase of 3523.1%.
The government estimates spending $426 million in grants this year.
Expenditures made by the government by way of state subsidies, such as transfers to energy consumers using less than 99 kilowatt hours per month, are complicating the state of public finances.
While in 2010 $371 million was spent in grants, in 2011 the government estimates that this figure will increase to $55 million.
The government, which currently subsidizes 50% of electricity bills for consumption up to 99 kw, analyzes continuing the subsidy.
The subsidy of $7.5 million a month currently benefits 825,000 households, which is equivalent to 62% of all the users in the country.
Laprensagrafica.com publishes declarations of Héctor Silva, the president of the Social Investment Fund for Local Development (FISDL, acronym in Spanish): “A team has been assembled to review the issue (focusing on the subsidy) and others that are on the agenda. The commission includes the Technical Secretary of the Economy. I do not want to go into details but, yes, we have begun a debate on the issue.”
Industrialists and entrepreneurs have criticized the abrupt elimination of the electricity subsidy by the government.
The Government of El Salvador had committed to a reduction of the subsidy in parts, the last reduction to be made made in October 2009. This benefit applied to consumption of more than 99 Kw/h. However, it was announced yesterday that it would not be able to continue with it, and that the regular rate would be charged beginning this month.
President Antonio Saca of El Salvador, under fire over his subsidies policy said he had no intention of changing it now after four years in power. Indeed, he added, he might even increase subsidies.
Several international institutions and national organizations say that Saca's indiscriminate subsidies help the middle classes more than the poor, who are the most in need.
The government of El Salvador will maintain subsidies on basic services while implementing an austerity plan to confront the nation's economic crisis, President Elías Antonio Saca said.
In a message to the nation, Saca said he wanted to be frank. "I know the situation is difficult, and there's nothing to indicate that this is going to change in the short term," he said.