The count of households benefiting from subsidies in Argentina has decreased by approximately three million since December 2023, coinciding with the commencement of President Javier Milei’s administration. At present, there are 2.1 million fewer households benefiting from electricity support and 900,000 fewer receiving assistance for piped natural gas in comparison to the beginning of the administration, as indicated by government data. The proportion of users covering the full cost has approached fifty percent of the total. The transition illustrates the effects of the La Libertad Avanza administration’s economic framework, which from the outset pledged to employ President Milei’s “chainsaw” to reduce public expenditure. The outcome has led to a notable decrease in subsidies, amounting to approximately US$5.6 billion. Relative to GDP, expenditure has decreased from approximately 1.4 percent to about 0.6 percent, aligning with the official objective of reducing it to 0.5 percent by 2026.
The decrease in subsidies has resulted in increased expenses for households. In April, a standard household in the Buenos Aires Metropolitan Area incurred an average expenditure of 212,694 pesos on utilities such as electricity, gas, water, and public transport, reflecting a significant increase of 49 percent compared to the previous year, as reported by the IIEP tariff observatory. The IIEP report indicated that utilities represented 12.2 percent of the average registered salary, highlighting the increasing burden on household finances. Milei’s administration has undertaken a comprehensive overhaul of Argentina’s subsidy register. The Energy Secretariat reported that there are 15,518 households in gated communities benefiting from subsidies, alongside 370,000 records associated with deceased individuals, and 1.59 million households that qualify for assistance yet have not submitted applications, as per government data. Subsidies for numerous businesses and industrial users were eliminated – a decision that has recently sparked concerns within the sector regarding the potential effects of the Middle East conflict on costs. The increases are a component of a wider tariff normalization strategy that anticipates monthly adjustments extending through to 2030, as outlined in the government’s energy emergency framework, which has been extended until the conclusion of 2027. “We are putting an end to a situation where households with high purchasing power received subsidies financed by all Argentines, while vulnerable groups were not always properly protected,” stated the Energy Secretariat.
In the realm of electricity, the number of subsidised households decreased from 10.8 million in December 2023, representing 67.1 percent of the total, to approximately 9.23 million by the conclusion of 2025, which accounts for 55.8 percent. The implementation of the government’s Targeted Energy Subsidies scheme resulted in a decline to 8.73 million users, representing 53 percent, which indicates a further decrease of 500,000 households. The trend in piped gas exhibited a comparable pattern. The number of users receiving assistance decreased from 5.64 million in December 2023, representing 59.8 percent, to 5.12 million by the end of 2025, which accounts for 53.4 percent. In the wake of SEF’s implementation, the number decreased once more to 4.78 million (49.8 percent), establishing a new context where most users no longer benefit from subsidies and are consequently subject to the complete energy costs. Recent tariff updates exemplify the magnitude of the increases. In May, the monthly fixed charges for residential gas users not receiving subsidies vary significantly, starting at approximately 3,976 pesos for low-consumption households in Buenos Aires City and escalating to nearly 95,000 pesos for those in higher-consumption categories. Additionally, per-unit costs can soar to as much as 426 pesos per cubic metre in certain segments.
Initiatives aimed at diminishing subsidies trace back to 2022, when a system based on income segmentation was implemented, categorizing users into ‘N1’ (high income), who bore the full tariff; ‘N2’ (low income), who benefited from the majority of subsidies; and ‘N3’ (middle income), who were eligible for partial assistance. This year, the government has streamlined the scheme, categorizing it into two groups: households receiving subsidies and those not receiving them, based on income, assets, and consumption patterns. The reductions have notably impacted middle-income users, who, under the former system, were eligible for partial subsidies and, in numerous instances, have now been omitted. The tariff adjustment has coincided with a notable increase in payment compliance. Official and distributor figures indicate that collection rates have increased from 48 percent to approximately 97 percent since the commencement of the administration, while arrears have decreased to nearly three percent. The enhancement in payment levels has aligned with a notable rise in household expenditure on essential services, as tariffs approach the full cost of supply coverage.