Argentine Supreme Court blocks Macri's gas price hike

Argentina's Supreme Court on Thursday blocked President Mauricio Macri's move to slash natural gas subsidies, a much-hated policy that has sent customers' bills soaring.

The ruling is the hardest blow yet to the business-friendly president's move to eliminate electricity, gas and water subsidies which he says are bloating the deficit and sapping the struggling economy.

In a unanimous decision, the top court ruled the government must hold public hearings before implementing any rate increase for residential customers.

The ruling does not apply to gas prices for businesses.

Angry Argentines had filed a flurry of legal challenges to the rate hikes after their utility bills shot up an average of 700 percent.

A federal court blocked the electricity rate hike earlier this month.

Protests had already forced the government to cap the gas increases at 400 percent for homes and 500 percent for businesses.

But lower courts suspended the increases. The government appealed all the way to the Supreme Court, to no avail.

Macri's chief of staff, Marcos Pena, said the government would call public hearings "as soon as possible, which is in three weeks."

He said the ruling showed that Argentina needs to overhaul what he described as an "energy system in crisis."

Political analyst Daniel Kerner of consultancy Eurasia Group said the hearing process would likely result in more modest price increases.

"This decision will complicate the government's ability to meet its deficit targets and will create uncertainty regarding the government's ability to define energy prices in the future," he said in a note.

In the past 12 years, Argentina has spent $52 billion on gas subsidies and $24.4 billion on electricity subsidies, according to the government.

Macri, 57, took office in December vowing to kick-start economic growth with free-market reforms after 12 years of leftist rule.

Argentina's economy -- the third-largest in Latin America, after Brazil and Mexico -- is facing a contraction of 1.5 percent this year, according to International Monetary Fund forecasts.

Macri, who has ended foreign exchange controls and triggered a currency devaluation, insists his reforms are necessary medicine to restore growth.