The new year brought with it the lock for the free withdrawal of the Compensation for Time of Service (CTS), created in the pandemic for families to face the crisis, and which was extended until December 2023. Once the health catastrophe has passed, since Congress of the Republic is fighting to authorize a new provision.
Through PL No. 7010, born within Popular Action, they propose a single disbursement of up to 100% of the CTS until December 31, 2024, arguing that it is now urgent to cover the economic needs caused by the recession.
This initiative joins a quartet of projects nested in the Legislative powerincluding a replacement text approved at the beginning of November in the Labor Commission.
Pasión Dávila (BM), president of this group, tells La República that the Permanent Commission has not called meetings for two weeks, so there is no light on whether the proposal will be debated.
A relief for homes
The economist and teacher Armando Mendoza considers it appropriate to prolong the withdrawal of the CTS, since we are going through a slow period of economic recovery, even more serious than in 2020, and job insecurity persists due to the decline in adequate employment and lower incomes.
“It should be a bounce-back year, but it’s not guaranteed. Many Peruvians have already eaten up their savings. The release (of the CTS) is a relief for family economies, but “It is not a substitute for having a well-paid job and adequate income.”he claimed.
It is worth adding that the balance of deposits in CTS accounts contracted from S/17,000 million in December 2020 to S/6,600 million at the end of 2023, according to data from SBS and Asbanc, collected by the Scotiabank Economic Studies Department.
Mendoza recalls that the CTS was created as unemployment self-insurance, but in the face of latent adversity, a license must be given to “spend what is yours,” which should not be interpreted as a grace or generosity from the State, since it is a product of the work of each one.
Is the withdrawal of the AFPs also viable?
A similar panorama is contemplated with the notorious seventh withdrawal of the AFP – anchored to the debate on the pension reform, at the discretion of the Economy Commission. Mendoza points out that in the short term it can mitigate the blows of rising prices and reduced purchasing power, although retirement savings are unprotected.
“What is the great support that the State is giving to family economies? In the sense of urgency, yes, let’s allow the withdrawal of the AFP. People who are in trouble with their finances must be allowed to seek some kind of relief. It is not that it is a wonderful solution because they eat up your pension savings,” he added.
The AFP Association (AAFP) is reluctant and alleges that the cooling of GDP does not merit a new release of funds, even though they recognized that “growth rates below expectations are a problem.”
No fiscal space to provide solutions
Mendoza warns that the State is entering a fiscal crisis due to the ineptitude of the tax system – translated into lower revenues to the treasury – and increased expenses, aggravated by “the political irresponsibility led by Congress,” who distributed “tax favors.”
With this, expenses will have to be adjusted and, with the constant pressure on the fiscal coffers, there is no space or resources to give bonuses or expand the coverage of existing programs.
Source: Larepublica
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