Energy Problems To Persist Despite Tariff Hike

August 2008 | Economic Analysis

After years of unsustainable policies, the decision taken by the Argentine government on July 31 to raise electricity tariffs was certainly step in the right direction. However, we see it as more of a forced response to the growing distortions within the Argentine energy sector (and economy in general) rather than a proactive decision to encourage much-needed investment in the energy sector. Given the mounting pressure on the government's fiscal accounts, we believe that either higher energy prices or severe shortages look likely to add to the country's economic problems over the medium term.

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