Growing poverty in Mexico further shows failure of CCT program

August 8, 2011

by superadmin

The number of poor Mexicans increased by over three million from 48.8 million in 2008 to 52 million in 2010

Philippine Congress should consider how poverty in Mexico is worsening before it approves doubling the budget of the conditional cash transfer (CCT) requested by the Aquino administration for 2012, despite having one of the world’s longest-running and largest CCT programs.

The 2012 national government budget submitted to Congress includes Php18.3-billion or 86% increase in the budget for CCTs, from Php21.2-billion in 2011 to Php39.5-billion in 2012. This is equivalent to some 0.36% of projected gross domestic product (GDP) in 2012. The requested budget increase supposedly expands the number of beneficiaries from 2.3 million in 2011 to three million in 2012.

However, recent trends tend to show the limits of this hyped program, said research group IBON. According to a report by Mexico’s National Council for the Evaluation of Social Development Policy, an autonomous but federally-financed agency, the number of poor Mexicans increased by over three million from 48.8 million in 2008 to 52 million in 2010. This means 46.2% or nearly half of the population are poor.

Mexico’s CCT program is among the world’s first and was launched fourteen years ago in 1997 as Progresa then evolved into the current Oportunidades after 2000. It is also among the world’s biggest and grew from between 0.30% to 0.37% of GDP annually between 2004 and 2008, to some 0.46% of GDP in 2011 covering 5.8 million households. The total value of all social safety net programs, including CCT, is at some 1% of GDP. The Mexican program has even been hailed as becoming increasingly efficient and innovative through the years.

The Philippines and Mexico are similar in both being large countries– with the Philippine population at 94 million and Mexico at 113 million– categorized as middle-income. World Bank loans are significant for both countries with US$2.7 billion worth to Mexico in 2009 and 2010 and US$405 million to the Philippines since last year. The Philippines’ CCT program is however smaller, in terms of cost and number of beneficiaries, as well as apparently of shorter duration– with the government uncertain if the program will continue after five years.

The Mexican government attributed the growing poverty to the global financial crisis. Yet the essential point remains that there is no substitute for creating long-term and sustainable jobs by strengthening the domestic economy. Instead of pushing for increasing dole-outs, the Aquino administration should focus on explaining how exactly it aims to create jobs for the over four million unemployed in the country. (end)