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BBVA Microfinance Foundation Director: Inflation Is a Tax on the Poor

La inflación es “un impuesto para los pobres”: director de FMBBVA

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Inflation is a “tax on the poor” and is “especially hard” for the most vulnerable groups, according to Javier Flores, director of the BBVA Microfinance Foundation (FMBBVA).

“It is said that (inflation) is a tax for everyone, but especially hard for the poor. It is a tax for the poor,” said Flores in an interview with the EFE news agency in Panama during the presentation of a study by the entity he directs.

Inflation in Latin America and the Caribbean will increase from 6.6% in 2021 to 8.1% in 2022, according to data from the Economic Commission for Latin America and the Caribbean (ECLAC).

In Flores’ opinion, this increase in inflation, as a consequence of the war in Ukraine, “is affecting and we are seeing it.”

“We have clients who are small agricultural producers who cannot buy fertilizers because they cannot pay the prices,” he added.

Many of these agricultural micro-entrepreneurs “are changing their crops to less productive ones.”

“The crisis is affecting everyone, but especially the poor,” he stated.

A study by Microserfin, an entity part of the BBVA Microfinance Foundation, revealed that 24% of its micro-entrepreneur clients in Panama, Colombia, Chile, Peru, and the Dominican Republic live in multidimensional poverty.

This report determined that micro-entrepreneurs have more deficiencies in education, sanitation, and access to water: 18 % of Microserfin’s clients have defects in the number of years of schooling, 14 % have sanitation problems, 12 % have difficulties accessing water, 39 % do not have their minimum health needs covered, and 19 % of the households do not have internet access, according to the results of the study.

The “poor” households are characterized by being in a rural environment, having a more significant number of members due to having dependent children, and low income, as they have 64 % fewer earnings than the “non-poor” ones.

In 2021, the extreme poverty rate in the region would have increased to 13.8% 2021 – some 86 million people – which represents a 27-year setback, according to ECLAC figures.

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