Although the Universal Guaranteed Pension (PGU) presented by the Government was approved last week in the Finance Commission of the Chamber of Deputies and Deputies, the truth is that the initiative raises serious objections in the command of President-elect Gabriel Boric and also arouses criticism among renowned economists.
“The problem with the proposal that the Government is accelerating in discounts is that it is not financed, that is the main problem. The project increases spending by almost one point of GDP, and has no financing, it has only 0.3% or 0.4% financed. It leaves us a burden as an incoming government that if the project is approved without the corresponding financing that we are going to arrive on March 11, we are going to look at our wallet and we will not be able to do almost anything, because everything will be spent without permanent income. The current project is complicated ”, explained the political coordinator of Boric’s command, Giorgio Jackson this morning in Chilevision.
In this context, the deputy defended the Universal Basic Pension proposal contemplated in the President-elect’s program, which considers an amount of 250 thousand pesos, “for everyone and without fine print,” another point of difference with the current government project.
But Jackson’s concerns were also expressed through a letter to the editor at The Mercury entitled “Without financing the PGU is no solution”, by economists Eduardo Engel and Andrea Repetto (who reinforced Boric’s command in the second round), the former president of the Central Bank José De Gregorio, and former minister Rodrigo Valdés (who in the last stretch of the campaign expressed support for the candidate’s option of Approve Dignity).
In it, they question the maneuver of the Executive, pointing out that although improving pensions is an urgent matter, “this cannot be at the cost of increasing fiscal imbalances even more, however understandable it may be that the Government seeks to buy a political victory in its aftermath ”.
For experts, the main problem is that the Government decided to separate the main project from the one that ensures its financing by eliminating, or modifying, tax exemptions, which must be voted on next week in the Finance Commission of the Chamber of Deputies.
“The Government entered two separate bills in Congress regarding the Universal Guaranteed Pension (PGU). In one of them he proposes the creation of the benefit; in the other, the reduction of some tax exemptions as part of its financing. This is a dangerous strategy, as it is highly likely that only expenditures will be approved. It is urgent to merge both projects “, they point out.
“Unfortunately, merging them does not guarantee that the new expenditures have financing and do not worsen the already complex fiscal situation. The Government proposes that an additional point of GDP be spent. But part of its financing consists of dissaving from the Pension Reserve Fund and taking advantage of lower spending on pensions than the old system that was used for a long time to finance previous reforms, “they add.
In the letter they explain that “it also involves using supposed slacks that are nothing more than a fanciful fiscal space that depends on unrealistic projections. Slacks do not exist when the structural deficit is close to 4% of GDP.”
In the opinion of Repetto, Valdés, Engel and De Gregorio, “it seems to us that the most appropriate strategy is for the processing of the PGU to take place in conjunction with the discussion of the reform of the tax pillar in the coming months. Only in this way will they be the incentives to reach agreements and approve a reform that comprehensively solves the problems of the pension system. We also understand that it is urgent to show progress. “
This point in the legislative process was also commented on by Jackson, who warned that “if the Government does not accelerate the financing part, and does not do it seriously well, this can only be left to parliamentary discussion.”
But Jackson went further, noting that “if we want better pensions, we have to raise more. That is why the tax reform is important where those with the highest income will pay ”.
–
