Tuesday, July 14, 2020
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Dignity Income in motion
Martin Garat
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Social policies provide subsidies for children and seniors.

Since Feb. 1, Bolivian banks have been bombarded by long lines of senior citizens at their doors, waiting for the pay dubbed “Dignity Income,” a new pension for all citizens over 60 years old.

The measure pays US$26 to those who lack any sort of pension and $20 to those who have another source of income and is said to benefit an estimated 700,000 senior citizens throughout the country.

Dignity Income was announced by President Evo Morales’ government last November as a substitute for the Solidarity Bonds, created by former president Gonzalo Sánchez de Lozada (1993-1997 and 2002-2003). The previous bonds totaled $230 annually and were only paid to citizens 65 years and older.

“The bond is important for me, I have no other income,” said Juan Zuleta, 62, who had already been standing in line for two hours in order to receive the pension. He said he would use the money on food, clothing and to help his children with their studies. However, he admitted that the pension is not a solution for his family’s fragile economic situation, but “emergency aid, a small boost.”

“The income should be minimum wage. I want to work, but the situation is very difficult. There is no work,” said Ceferino Chuquimia, 70, who was behind Zuleta in line. Despite his disagreement with the quantity given, Chuquimia confessed he was thankful to the government for the new pension.

Dignity Income is the second bond that the current government has created. The first was labeled “Juancito Pinto,” after the 12-year-old boy who died in 1880 fighting in the War of the Pacific against Chile, and is directed toward children between five and 10 years of age who study in public schools. The pension is distributed at the end of the year when they finish classes in order to prevent drop-outs.

The $26 education pension was decreed by Morales in October 2006. More than a million children benefit from the measure, financed by the income earned on natural gas exports, which has increased significantly after the industry’s nationalization two years ago.

Necessary but not enough
“Dignity Income and Juancito Pinto have an important impact on the most marginalized sectors. The poverty index will decrease, but not from 60 percent to 40 percent as Vice President Álvaro García stated,” says economist Alberto Bonadona. “The pensions will also strengthen the domestic market, though not very significantly.”

Some economists have suggested that the money used for the bonds would lower the poverty level more if they were used for investment and to encourage exportation. Bonadona, however, does not agree.

“You cannot demand a person who does not eat well — and who has not eaten well his whole life — to be productive,” he said. “In Bolivia, hunger is endemic; there are no famines, but many people suffer from malnutrition their whole lives. If people can eat better as a result of the pensions, then it is a good use of money.”

Bonadona also asserted the need to accompany the bonds with promoting national production and exportation.

“If nothing is invested in Bolivian industry so that we can export, we will not overcome poverty; very little will be alleviated with the bonds. And the current government does not have an economic vision that permits the creation of a competitive economy,” he states.

Economist Rosa Talavera also considers the bonds to be positive, but suggests that the government should organize campaigns for more bond money to be invested in Bolivia.

“They should organize school supplies fairs with national products at the same time they pay bonds to the children. It is not good that the money is spent on toys or imported used clothing,” she said.

Another problem, according to Talavera, is that government talk establishes a relationship between the bonds and the nationalization of natural gas.
“That reinforces the idea that it is possible to live from the sale of our raw materials. What we need is to foment a spirit of enterprise,” she signaled.

Bonadona and Talavera both warn that Dignity Income could become unsustainable in the long run.

“There is a danger that within 10 years we will find ourselves once again absorbed in the discussion of how to finance it. If the price of gas goes down, the Dignity Income will no longer be viable,” said Bonadona.

Talavera, on the other hand, believes that “the government committed an excess when it lowered the age to only 60 years. That instantly doubled the number of Solidarity Bond beneficiaries.”

The bond’s financing has yet to be determined. The government wants to use revenues from the sale of gas currently allocated to local governments, but governors — the majority opponents to the official party — defend their budgets tooth and nail.

“Dignity Income is a political move. Morales’ Movement Toward Socialism (MAS) fights for the right to use profits obtained from the nationalization of gas according to its own criteria. But a good part of the income goes to local governments controlled by the opposition. By taking away this income, MAS looks to weaken the opposition,” analyst César Rojas explained.
Dignity Income has additional political benefits for the government.

According to Rojas, “the Solidarity Bond linked to a previous government is eliminated and replaced by a new one, a little more generous, which is linked to the current government. This generates constituency for Morales.”


Ceferino Chuquimia, in line to
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