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Uruguay watches its pockets as pandemic spreads poverty

RIO DE JANEIRO, BRAZIL – The Covid-19 pandemic added 100,000 to the number of poor people in Uruguay, a country known for its social policies and which currently occupies last place in the ranking of the Economic Commission for Latin America and the Caribbean (ECLAC) in monetary transfers to the vulnerable population.

In February, Economy Minister Azucena Arbeleche said that in 2020 the country invested 2.3% of its Gross Domestic Product (GDP), some US$1.217 billion, to tackle the pandemic.

The Covid-19 pandemic added 100,000 to the number of poor people in Uruguay. (Photo internet reproduction)

Of that figure, US$711 million, 1.3% of GDP, represented direct investment, with measures to assist the Ministry of Social Development (MIDES), health insurance and unemployment subsidies, while the remainder supported the Guarantee System (SIGA), which the State finances to ease access to bank loans for companies.

“The response to the pandemic was forceful,” said Arbeleche, who noted that compared to 2019 there were 40% more MIDES beneficiaries.

However, while in 2019 poverty stood at 8.8%, informality below 25% of the employed population and Uruguay boasted the lowest economic inequality on the continent, in 2020 poverty increased to 11.6%, which translates into 100,000 more people added to the 300,000 who were already in that situation.

Economy vs. health

Economist Gabriela Mordecki, coordinator of the Institute of Economics of the School of Economics of the University of the Republic (UdelaR), said that the measures adopted by the government “are contrary to the health needs of the people.”

In this respect, she said that direct subsidies should be granted to the unemployed so that they may stay home, because “the reality is that the solution does not lie in easing access to credit. People are no longer in a position to get into debt. For a year there have been thousands of Uruguayans who are unable to bring a plate of food home and eat in soup kitchens. The government does not provide solutions, it patches things up.”

Uruguay, the country where 8 months ago the Covid-19 mortality rate stood at 1.28 per 100,000 inhabitants, currently faces a rate of 57.85 per 100,000. Early last month, the government announced a “shielded April,” returning to voluntary quarantine to reduce infections and deaths, but the strategy did not work.

“They close social programs and Uruguay remains among the last in investments, next to poor countries that have nowhere to find money to spend, but they still do it. What is being provided is not enough, and even if people don’t want to, they must go out to the streets to work,” Mordecki pointed out.

Monetary transfers

The Ministry of Economy’s investment projection for the pandemic in 2021 is US$900 million, 1.6% of GDP. This includes the maintenance of the measures adopted and the incorporation of new ones, such as the payment of a subsidy to self-employed workers for 3 months, the doubling of food baskets and family allowances for the poorest, credit programs for companies, and exemptions in electricity and telephone flat-rate charges.

However, these measures do not have a major impact on the plight of the most needy. For example, the temporary doubling of the MIDES family allowance, a benefit granted to low-income people with dependent children, represents an additional 3,000 pesos per month. That is US$68 per month, in a country where the monthly minimum wage is 17,930 pesos, equivalent to US$407.

According to economist Bruno Giometti, a member of the Cuesta Duarte Institute team, a research center of the PIT-CNT labor union, more resources should be invested in cash transfers to poor and near-poor families, more subsidies should be allocated to small and medium-sized companies with compensatory measures in terms of maintaining employment, and special subsidies should be increased for sectors affected by the reduction in mobility.

Discrepancies in figures

Giometti said that the US$900 million projected by the government is not an exact figure, since it includes, among other things, health spending, such as the vaccination program and new intensive care beds, as well as measures for the productive sector, such as monetary transfers, subsidies to struggling companies and unemployment benefits.

In this respect, the total projected to address the pandemic, according to the economist, “is US$430 million, less than what was invested in 2020.”

The expert criticized the Government’s failure to adopt some of the measures recommended by the Honorary Scientific Advisory Group (GACH), such as granting leave to the chronically ill population, restricting non-essential economic activities, reducing the capacity of public transportation and suspending sports activities.

“All these measures cost money because they must be accompanied by economic compensations. It is clear that faced with this dilemma, the government chose not to invest more resources,” he pointed out.

With or without investment, the pandemic numbers speak for themselves. By Tuesday evening, Uruguay totaled 206,946 infections and 2,861 deaths since March 13th, 2020, when President Luis Lacalle Pou decreed the health emergency.

With these figures, the Government calls for a “shielded May,” in a country where the pandemic not only affects the lives lost, but also the 100,000 new poor, who are added to the 300,000 pre-existing and who are unable to quarantine because, unlike others, they are forced to take to the streets in order to eat.

Source: El Pais

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