Argentine leader raises cash handouts 35 percent

AP News
Posted: May 22, 2013 7:38 PM

BUENOS AIRES, Argentina (AP) — Argentina's president announced a $3.2 billion annual increase in cash handouts for the poor, students and pregnant women Wednesday, saying the programs will reach nearly 700,000 additional children, pay their families 35 percent more and encourage consumer spending in what is an election year.

Cristina Fernandez said the total cost of the programs will rise to 41 billion pesos, or $7.8 billion a year at the official exchange rate. She called it a powerful boost to consumer demand.

"We're going to augment the economic activity," she said. "It's essential to maintain the level of employment so that the people keep buying things."

Fernandez urged business executives to participate in her government's "national project," and think "not just about making profits, but generating jobs as well."

Earlier Wednesday, the government announced that a price freeze on 500 consumer goods would remain in place through October — which is when Argentines cast ballots in legislative elections that will determine whether the president has enough votes in Congress to eliminate constitutional term limits that would end her mandate in 2015.

Fernandez said her government will be watching businesses closely and taking action against unjustified price increases that she blames for fueling Argentina's inflation. The official statistics institute says prices are rising 10 percent a year, but private economists estimate inflation is two to three times higher.

Young people nationwide will be enlisted into a program the president dubbed "Mirar para Cuidar" (Watch to Protect) to make sure supermarkets keep their word on prices.

"We're not going to leave the price accord to good faith," she said. "We're going to use the force of the political and youth movements to fan out in the entire territory."

The cash handouts that Argentina gives to mothers for each child who stays in school and gets regular vaccinations is increasing according to a sliding scale by as much as 35 percent, to as much as 460 pesos ($88) a month per child. A stipend that students get to buy school supplies each year is more than doubling to 340 pesos ($65). As before, mothers can start getting the cash as soon as they complete their first trimester of pregnancy.

Many Latin American countries have some form of "conditional cash transfers," or welfare that depends on keeping kids in school and healthy, since Mexico pioneered with such a program in the 1990s. Brazil's program reduced poverty "by an astonishing 50 percent" from 2003 to 2011, said Michael Shifter and Cameron Combs of the Inter-American Dialogue in Washington, who analyzed the programs in a paper published in the World Politics Review this month.

The handouts in Venezuela and Argentina, which are delivered by presidential decree in a political context rather than through institution-building, have been among the least effective, the authors concluded.

"However well designed and intentioned social programs might be, they are most likely to be sustainable if they are carried out within a context of effective democratic institutions. This is critical to ensuring that spending is adequately tailored to the changing needs of recipients instead of merely buttressing support for traditional office-holders," they wrote.