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Argentina on the brink of recession, economists warn

ENERGY prices are set to rise by a massive 30 per cent in Buenos Aires by the end of the year, with economists warning that Argentina is on the brink of recession.

The country’s Energy Minister Javier Iguacel announced the steep rise today, telling a press conference that the increases in the city are meant to adjust for inflation.

Prices of energy, water and gas bills have rocketed by more than 1,300 per cent since November 2017 in some parts of the country as President Mauricio Macri’s government slashed subsidies as part of its economic austerity plan.

Mr Iguacel sought to allay fears, telling reporters that the gas price rises “will not be more than 25 per cent, while the increase in electricity will be less than 30 per cent.”

Demonstrations took place in the capital last week as the G20 leaders gathered for a summit in Buenos Aires.

Trade unions, students and activists blocked roads in protest at the economic policies of the International Monetary Fund (IMF) after the government secured a $50 billion (£38bn) loan in June.

They feared a return to the economic crisis of the early 2000s and rejected the austerity package imposed by Mr Macri’s government.

Left and Worker’s Front opposition politician Nicolas Cano described the IMF loan as a “colonial pact, a harder structural adjustment against the people.”

The terms of the loan mean Argentina must implement a deficit reduction programme of 1.3 per cent of GDP by 2019. 

Mr Macri’s administration has already presided over a massive jobs cull with 73,800 private-sector jobs axed since he came to power in December 2015.

Mr Iguacel explained that Argentina was hoping to strike a deal to export gas to neighbouring Chile in a bid to stave off an impending recession. 

Poverty levels remain high at 29 per cent, with inflation at around 25 per cent for the year. The Argentinian peso has dropped against the dollar, with Buenos Aires residents being forced to participate in “barter clubs” to afford basic goods including sugar and flour.

Mr Iguacel sought to blame previous administrations, including those led by Nestor Kirchner and Cristina Fernandez for Argentina’s economic situation, saying they left a “heavy inheritance” for Mr Macri’s government to deal with.

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