Announce subsidies to households to alleviate price rises

In order to mitigate the effects of the rise in prices of basic products, the Government plans to grant direct subsidies to the pockets of families and thus boost the reactivation of domestic demand.

“We consider it essential that the reactivation of the economy be sustained not only by the recovery of demand and the prices of the external markets towards which our minerals and our agricultural production are oriented, but also by the recovery of internal demand,” he said. the president of the Council of Ministers, Mirtha Vásquez, during her presentation to Congress to request the confidence vote.

Along these lines, he pointed out that, if the price rise continues, they would grant a second Yanapay bonus next year. Although he did not provide further details of the amount, he indicated that it would be finalized if fiscal conditions allow it.

It should be noted that currently the individual bonus of S / 350 is aimed at 13.5 million citizens who were affected by the pandemic, in order to guarantee coverage of the basic needs of households whose income was affected by the COVID-19.

Bonus to workers

The premier also announced a subsidy of S / 70 per month for 2.5 million formal workers in vulnerable situations with salaries lower than S / 2,000, concentrated in the mypes and in the sectors most affected by the pandemic, such as commerce and services. This seeks to provide them with temporary support to improve their purchasing power.

“This measure, which is different from the coverage of the Yanapay, will improve in the short term the purchasing power of more than 2.5 million formal workers in vulnerable situations, thus mitigating the effect of recent increases in consumer prices “, explained the owner of the PCM, without providing further details on the dates to be executed.

More beneficiaries of the FISE voucher

Vasquez He pointed out that at the end of this year the Government will increase by 250 thousand the monthly number of beneficiaries of the discount vouchers for the purchase of the LPG gas cylinder that benefits vulnerable families.

This subsidy, which is financed with resources from the Social Energy Inclusion Fund (FISE), amounts to S / 20 and is used to buy a 10 kg domestic gas bottle.

Measure household loss

By Javier Herrera, IRD researcher

It should be noted that the strategy of direct compensation to households is more preferable to price control. It is better to transfer to the households that will have a greater impact with the rise in prices, to give a generalized subsidy.

Regarding the amount of the bond, it will depend on how much is the loss of the households with respect to the rise in prices. It should be remembered that few bonds have been issued against the accumulated loss of households during the pandemic. The bonds distributed have not compensated for the loss, they have only attenuated. In other words, households are still hit by the COVID-19 crisis.

The recovery of quality employment is still lagging behind, and the gross product may return to the level of the prepandemic period, but the same is not the case with employment. The jobs created are of low quality and therefore household income has not yet recovered what was lost.

Any fiscal boost to demand has a stimulating effect, but it must be ensured that it is sustainable over time.

The data

Yanapay payment. To date, about 5 million people have already collected the S / 350 bonus, according to the owner of the Ministry of Development and Social Inclusion (Midis), Dina Boluarte.