KEY POINTS
- Uruguay’s poverty rate fell to 14.8% in the first half of 2026, down from 17.7% a year earlier, with extreme poverty dropping from 1.8% to 1.2%.
- The government plans to increase and unify child and adolescent transfers from 2027, with payments moving exclusively to bank accounts or electronic money instruments.
- Economists link the improvement to real wage growth, higher minimum pensions, and lower-than-expected inflation, and expect further declines once the transfer reform takes effect.
Uruguay’s poverty rate fell to 14.8% in the first half of 2026, down from 17.7% a year earlier, a reduction representing approximately 95,000 people. Extreme poverty also narrowed sharply, from 1.8% to 1.2%. The government now expects a planned increase and unification of child and adolescent cash transfers from 2027 to deepen the decline.
The improvement came before the Executive implements the transfer reform approved in the most recent budget accountability bill, which allocated an additional US$31 million to strengthen and unify family allowances, the Equity Plan, the Uruguay Social Card, and the Crianza Bonus. The official figures were first reported by El País.
Minister of Social Development Gonzalo Civila described the data as confirmation of the government’s policy direction. He highlighted that the Crianza Bonus for vulnerable households increased 25% in 2026 to $2,783 per month for simple Uruguay Social Card recipients, and 50% to $3,339 for households with double coverage.
Civila said the administration’s principal priority is reducing inequality and poverty, especially among children. He added that the move toward a unified child and adolescent allowance will further support the reduction trend once implemented.
Economist Matías Brum attributed the improvement to real wage growth, larger increases for the lowest pensions, and inflation below expectations. He projected that the 2027 transfer shock could reduce poverty by an additional one to three percentage points.
Nicolás Cichevski of CPA Ferrere noted the largest reductions occurred in Montevideo and the country’s coastal region, and among children under 13. He recorded poverty at 19.7% in the first half of 2023, 17.3% in 2024, and 16.6% in 2025.
Opposition figures acknowledged the downward trend but attributed part of it to the previous administration. National Party deputy Pablo Abdala said the decline began earlier, while Independent Party leader Pablo Mieres called for waiting until the full-year 2026 data.
Social Stability and Fiscal Outlook
The consolidation of family transfers into a single benefit, scheduled to begin January 1, 2027, also shifts payments exclusively to bank accounts or electronic money instruments. This move aims to reduce exclusion errors, which have been estimated at 31% for family allowances and 36% for the Uruguay Social Card. With total spending on the main vulnerability-focused transfers at about 0.6% of GDP, the reform is fiscally contained while targeting broad coverage. World Bank projections for Uruguay show GDP growth of 1.2% in 2026 and 1.8% in 2027, a stable macroeconomic backdrop for expanding social spending.
