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Argentina’s IMF-Backed Subsidy Cuts Are Boon to Power Producers

  • Less subsidies would mean more reliable payments to generators
  • Gas drillers should also gain from passing through well costs
Workers stand in front of the MSU Energy SA General Rojo natural gas plant in General Rojo, Buenos Aires province, Argentina, on Wednesday, July 7, 2021.

Workers stand in front of the MSU Energy SA General Rojo natural gas plant in General Rojo, Buenos Aires province, Argentina, on Wednesday, July 7, 2021.

Photographer: Erica Canepa/Bloomberg

Energy producers in Argentina are poised to fare best from the South American nation’s latest agreement with the International Monetary Fund, analysts in Buenos Aires say. 

Narrowing the fiscal deficit by reducing government energy subsidies, which climbed to $10.9 billion last year, was a key sticking point in talks. Now that a deal -- laid out in a memorandum of understanding and pending final approval -- has been hammered out, investors are scrambling to understand its impact on Argentine energy assets.