This is what Latin America would have saved if it had better focused its subsidies

According to the President Inter-American Development Bank (IDB)Reina Irene Mejía if Latin American countries are better targeting beneficiaries subsidiesyou could save up to 4% of your gross domestic product.

“The region can save 4% of GDP due to the fact that transfers will be delivered only to those who really need them, including by eliminating surcharges on purchases,” the president said at the opening of the 56th meeting of the Central Banks Network and ministries of finance Latin America and the Caribbean.

More targeted subsidies

The spokeswoman explained that since the beginning of the pandemic, governments have become accustomed to making transfers and subsidies to meet the needs of families, but this spent It was not as effective because the right filter was not put in place to allocate financial support to those who really needed it.

“Remittance programs need to be scaled up to reach new and vulnerable populations that could be povertysuch as women, minorities, migrants and groups in rural areas that are harder to reach,” Mejia said.

Among other tools, he added, politicians “should take advantage of new digital technologies innovative ideas generated by the pandemic and use them to effectively help those in need.

“What really worries me is that inflation it has a disproportionately negative impact on the poor, who have fewer tools to cope with it,” said Mejia, who assured that in a scenario where food prices rise by 20%, about 9.5 million people in the region could fall below the poverty line.

Cash transfers sufficient for poor households to help offset food price shocks are estimated by the IDB to cost about $1.3 billion per month, equal to 0.4% of the region’s GDP. EFE