The Salvadoran government prepares for possible increases in the price of oil

Since the international increases in oil prices began, the government of President Nayib Bukele has taken action to cushion its effects on the pockets of the population. In this sense, two taxes on gasoline were suspended and a transitory bill was promoted to set fuel prices. That, according to the Minister of Finance, Alejandro Zelaya, has meant savings of $2.2 million per day for Salvadorans.

For César Addario, financial specialist and vice president of the firm Exor Latin America, although the subsidy affects the general revenue coffers, its impact on the chain is favorable and it is,” a measure that very well mitigates the fact that the prices of consumption in general.

“The prices of a gallon of gasoline in El Salvador are lower than those in the Central American region. The foregoing implies a positive impact on Salvadoran consumers and economic sectors, since it puts them at an advantage compared to those of the region, due to the fact that they have a significant reduction in the cost of fuel,” said Addario.

However, the outlook does not look positive for the coming months, as projections indicate that the price of oil will remain high, despite the fact that there have recently been falls as a result of fears of a global recession and threats to oil demand. Asian countries for new COVID-19 infections

«The projections made by the different financial institutions regarding the price of WTI (Texas oil) have been raised for 2023. Morgan Stanley is the one that foresees a more optimistic situation by raising it to $100 per barrel, while JP Morgan has projected that this is $150 per barrel,” Addario said.

If these upward forecasts are met, the Bukele administration could extend the validity of the measures, according to recent statements by Minister Zelaya.

“We are going to continue analyzing the price of fuel. President Bukele was clear from the beginning in the launch of the measures. We are going to maintain them as long as the situation does not improve,” said the head of the Treasury.