Monday, February 04, 2008

Bolivia Fights Poverty by Launching Pension Benefit

(digitalwarriormedia) On Friday, the Bolivian government kicked off the Renta Dignidad - a national program that will help lift thousands of Bolivians out of poverty by taking government revenue and putting it back into the hands of elderly citizens.

Speaking in the Cochabamba department, President Morales and his administrators initiated Renta Dignidad (Dignity Income) payments at a public event attended by elderly Bolivians and representatives from the social sectors.

Similar events were carried out in cities and towns throughout the country by ministers, deputy ministers, parliament members, and other governmental representatives.

Vice President, Alvaro Garcia Linera, launched the program at an air base in Santa Cruz, while Foreign Minister, David Choquehuanca, handed out money to the elderly in El Alto.

Morales declared the pension part of the “revolution and democratic social change” taking place in Bolivia. The measure is described by various social sectors as historic – demonstrating solidarity for members of society that had previously been excluded.

The Dignity pension will provide more than 676,000 elderly Bolivians with a monthly payment of 200 bolivianos or about $26. The benefit is divided into two different groups of elderly Bolivians who are no longer working.

Elderly citizens with no income will receive 2400 bolivianos ($325) annually, while those retirees who have some other form of pension will receive 1800 bolivianos ($242) per year. Those over 60 years of age who are working and receive a salary are ineligible.

The expanded pension program replaces the Bonosol (Solidarity Bonus) that provided a monthly income to Bolivians over the age of 65. The new program will benefit 226,000 more men and women than the previously administered Bonosol pension.

More than 530 institutions throughout the country will distribute the monthly sums. In remote locations, the government plans to use the Armed Forces to administer the pension program from their barracks or use mobile units to travel to the remotest communities.

According to government data, the program’s cost will be approximately 1.68 billion bolivianos ($219 million), with the majority of the Dignity Income being funded collectively through departmental revenue of about 890 million bolivianos ($116 million) - made possible by the Direct Hydrocarbon Tax (IDH).

The Treasurer’s Office and the Indigenous Fund will provide the remainder of the program’s funding.

As promised, the government began payments on February 1st despite protests by political opponents. President Morales received criticism for moving forward with the Dignity Income even with ongoing negotiations between departmental governors; in particular the five governors from Santa Cruz, Cochabamba, Tarija, Beni and Pando that vehemently protest the amount of their contributions.

Regional governmental prefects have demanded a return of the 30 percent IDH revenue taken from their departmental budgets in order to help sustain the social program.

On January 7, negotiations about financing the program began and continued throughout last month, but the efforts failed to reach any resolution between the central government in La Paz and the regional departments.

On January 25, in an effort to reach an agreement, the Bolivian government put forth a proposal to increase the central government’s funding of the Renta Dignidad, but the proposal still remains unanswered by the opposition.

While speaking during a televised speech on Friday, Morales dismissed his critics saying, "These economic resources, whether from our natural resources or the direct tax on hydrocarbons, don't belong to the president or the mayors or the governors. This money belongs to the Bolivian people and must return to the Bolivian people."

Supporters of the program view the Dignity Income as a means to redress the historical injustices that many sectors of workers (such as maids, taxi drivers, housewives, miners, artisans, farmers, and even professionals) had been subjected.

It represents a way of paying society’s debt to elderly Bolivians who laid the foundation for the economic and social changes taking place in the country.

In addition, the Dignity Income attempts to meet governmental objectives of confronting and reducing the incidence of poverty in the poorest nation in South America.

Since nationalizing the nation’s oil and gas sectors in May 2006, the nation has been flush with new cash flows, as government coffers benefit from record high energy prices. The Morales administration has directed some of the increased revenue towards social programs in health, education and now the pension initiative.

Inflation of 12% and the falling U.S. dollar have both put pressure on Bolivia’s economy by increasing consumer prices. More than 60 percent of Bolivia’s entire population lives in poverty, with many unable to afford basic needs, let alone higher inflation rates.

As the funfolding mortgage crisis, historical deficits and the costs of an unending war take a toll on the American economy, as well as economies around the world, the U.S. government is contemplating a national stimulus package.

Some economists and policy experts support a federal tax credit proposal that would put money into the hands of taxpayers, thereby infusing the economy through consumer spending. One of the largest and most effective anti-poverty tools in the U.S. is the Earned Income Tax Credit - a tax rebate program that serves as a wage subsidy to low-income taxpayers.

In many ways Bolivia is merely using public policy to implement an economic stimulus model by redistributing government funds to members of society that will spend the newfound subsidies on basic consumer goods.

Unlike subsidies to the wealthy, who can horde their income or divert funds to international financial institutions, the money designated for the pension will be spent within the country on goods and services that will not only help keep elderly Bolivians out of poverty, but may potentially play a healthy role in the entire Bolivian economy.

Photos: ABI



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