Argentine buses, against the ropes due to inflation

Argentine buses, against the ropes due to inflation

Workers from the Buenos Aires bus drivers union protest after the murder of one of their colleagues, on April 3, 2023.
Workers from the Buenos Aires bus drivers union protest after the murder of one of their colleagues, on April 3, 2023.DPA via Europa Press (DPA via Europa Press)

He bondi or “collective” is part of the Argentine culture. The first cars began to circulate at the end of the twenties of the last century. Behind the wheel there were taxi drivers in crisis, who opted to get more than one passenger with a much lower rate and a fixed route. Those little vehicles soon evolved and became buses. When the tram died, the buses grew. They were always in private hands, first by an owner who was often also the driver, and then by companies of various sizes. Almost a century later, there are 18,500 cars spread over 386 lines that transport 9.7 million people every day throughout the AMBA, as the city of Buenos Aires and its metropolitan region are called. The model is now going through a serious crisis, devastated by inflation and a system of state subsidies that is on the brink of collapse.

Subsidies for public passenger transport began in 2001, with the corralito crisis. Until then, the companies managed without state aid, with a ticket that was around 0.85 dollars per passenger. The economic debacle left companies on the verge of bankruptcy and users without money to pay for their trips. The State intervened: it covered a good part of the operating costs of the colectivos and, at the same time, kept ticket prices at bay, which threatened to skyrocket after the devaluation of the peso. The model worked during the emergency, but it was maintained when the economy was already growing at Chinese rates. AMBA passengers today pay a little more than 10% of the real cost for their ticket, while the State provides part of what is missing. The percentage comes from a “bondi index” created by the Argentine Association of Automotive Transport Entrepreneurs (AAETA).

Keeping the bus ticket at bay last year cost the Argentine State 822 million dollars. There is so much money for a bankrupt State that even the International Monetary Fund (IMF) has an eye on the subsidies with which Argentina tries to contain inflation. Today, not only transportation is subsidized, but also electricity, gas, water, and many foods considered essential.

The Argentine Government promised to the Fund to lower its fiscal red to 1.9% in 2023, as part of the refinancing agreement for a debt of 44,000 million dollars. And that is why the IMF demanded “that spending be well targeted”, as Gita Gopinath, number two of the IMF, warned this Wednesday in an interview with EL PAÍS. “That energy subsidies, for example, are aimed at the most vulnerable is essential. Much more targeted social assistance is needed,” she said.

The model is even more problematic because, ultimately, it no longer fulfills its mission. Year-on-year inflation exceeded 102% last month and when the CPI for March is known this Friday it will rise even more. Inflation is the great enemy to defeat, the cancer that accelerates the crisis and increases social conflict in Argentina. The case of the collectives is an example of this. “The ticket went from 18 to 39 pesos in 4 years, between 2019 and 2023. That is, it doubled its value. In the same period, salaries were multiplied by five”, denounced the AAEE in a statement. This week, the Metropol company, which groups 23 lines, stopped circulating due to lack of funds. “16 months ago they did not remove 15% of the subsidies,” complained the vice president of the group, Luciano Fusaro. “This change in the distribution of subsidies affected our operation; We presented a precautionary measure that was not complied with by the Government. That is why we are especially affected and the effect is seen in the services, ”he said.

According to the AAEE, the Government owes them 24,000 million pesos (109 million dollars) in subsidies, while AMBA passengers pay “the cheapest ticket in history.” According to Fusaro, the ticket should cost 336 pesos, against the current 39. “We have to survive without subsidies and that the subsidy does not go to the company but to the people”, he says.

When the model was imposed, each company received aid based on an affidavit with the number of passengers transported and kilometers traveled. Such an act of faith on the part of the Government gave rise to all kinds of excesses. In 2009, the Kirchner government launched the Sube card, a prepaid ticket that allows you to know exactly how many people a line transports. A leap towards transparency was expected, but it never happened. The state subsidy still benefits both the poorest and the richest user, because it does not discriminate.

There is consensus that the current system does not allow for more. It is insufficient as a weapon against inflation, it does not cover the costs of the companies (more than 4,000 groups have already completed the 10 years of useful life provided by law and there is no money to renew them) and it generates distortions between large and small companies. Metropol is one of the first. The Minister of Transportation of the province of Buenos Aires warned this Thursday that if they do not take the cars out on the street in the next few days “they will lose the contracts and the tender will be called” for their routes.

The environment for discussion with companies is not the best. The murder, ten days ago, of a driver with a shot to the head ended with his companions attacking the Buenos Aires Security Minister, Sergio Berni, with their fists. This Thursday, seven lines of the La Cabaña company went on strike after the assault on two of its drivers. The spirits are not for big agreements.

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