Populist Argentine government begins painful cuts

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Associated Press

Posted on March 27, 2014 at 6:02 PM

Updated Thursday, Mar 27 at 8:04 PM

BUENOS AIRES, Argentina (AP) — Argentina is cutting subsidies to survive a cash crunch. As a result, many people could see water and gas bills double.

Economy Minister Axel Kicillof says the populist government is sticking with its model of transferring wealth to help the poor and stimulate the economy. But it can't afford to keep paying 80 percent of everyone's basic services.

Exempted for now are factories and poor people, as well as people in the extreme south and north of Argentina.

That leaves businesses and middle- and upper-class consumers. They must reduce consumption by 20 percent to avoid paying higher bills.

Argentina already suffers nearly the world's highest inflation, at 55 percent a year. But planning minister Julio de Vido says the cuts won't be inflationary because people will use energy more rationally.

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