Government studies a new increase in Solidarity Income

The National Government is analyzing the possibility of expanding the Solidarity Income program due to inflation, to prevent vulnerable families from being further affected by the increase in the cost of food and other items affecting Colombians.

The director of the Department of National Planning (DNP), Alejandra Botero, said that next week there will be announcements about it. “It is under evaluation (...) We have several challenges in the midst of this juncture and in the coming weeks we have an announcement because Solidarity Income is the program that best focuses on cash transfers,” he announced.

Similarly, the director of the DNP recalled that as of June about four million beneficiaries of the Solidarity Income program will receive a differential amount, depending on the number of household members and their income gap in terms of the Sisbén classification group (groups A, B, C).

It should be noted that, last February, the Government announced an 18% increase for the remaining payments this semester. Likewise, beneficiary households receive $380,000 every two months, one in March and the other in May.

The investment of the program for 2022 will be $7.2 billion, to accompany the more than 4 million beneficiary households. In the 23 payments that the program has made since its creation in March 2002, $11.5 billion has been invested.

And in addition to the Government's plan to make the extension of Solidarity Income ready by 2023, a decision would have to be made by the next president, the official said that the program can be the basis of a universal basic income scheme.

The entity announced that it will deliver the social register, which is a new tool to target aid programs that is 70% advanced.

Finally, according to the National Planning Department, since the creation of cash transfers, about $61 billion has been transferred to people in vulnerable conditions, of which $32.7 billion, or more than half, has been transferred during the government of Iván Duque.

Colombians have felt pressure on the household economy in the first months of 2022 with an increase in the price of most foods, especially the most common ones in the family basket. With regard to this inflationary peak, it is expected that costs will begin to normalize in May.

This was established by Fedesarrollo in its Economic Outlook for April, which sets out a favorable forecast for the national economy, albeit with the effects of a slowdown due to different factors, both internal and external.

The economic research center starts from the fact that in 2021 there was an accelerated growth of the economy that allowed in the fourth quarter of that year, which allowed to record the highest GDP in the country's economic history. However, for this year the context is different, so there is a forecast of real growth of 4.6% of GDP for the total of 2022.

Although the current account deficit increased in 2020 and 2021, it is expected to reduce to -4.5% of GDP this year with the stabilization of the trade balance of exports and remittances. Even the Ministry of Finance showed a fiscal deficit 7.1% of GDP in 2021, lower than expected. For Fedevelopment it means a favorable outlook for this year.

“However, in order to continue the process of fiscal consolidation in the medium term, it is necessary to take measures that promote the increase in permanent revenues and an adjustment in spending that increased significantly during the pandemic,” says Prospectiva's analysis.

Fedesarrollo argues that Colombian economic dynamism, coupled with external factors such as the slow recovery of global supply chains and a rise in the price of commodities such as oil caused by the war between Russia and Ukraine, have led Colombia to face a challenge in the global inflation wave.

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