Pandemic emergency aid to be extended for another 3 months – Brazil’s Economy Minister

RIO DE JANEIRO, BRAZIL – The government will extend the emergency aid to the most vulnerable for another three months, said Economy Minister Paulo Guedes. Accordingly, the aid during the Covid-19 pandemic will be extended until October, at the same amounts, between R$150 (US$29.6) and R$375 and with equal numbers of recipients. Currently, the aid covers some 39.1 million Brazilians.

According to Guedes, the Ministry of Health has reported that the entire adult population will be vaccinated against Covid-19 by October. Until then, the government wants to ensure that the most vulnerable are protected, hence the need to extend the aid.

The Minister also stressed that the measure has been steered by the Ministry of Citizenship, and that the final decision on the extension is President Jair Bolsonaro’s.

Extraordinary credit

Government officials stated that in order to fund the extension, an extraordinary credit of approximately R$20 billion must be opened. The final figure is still being defined based on data from June payments.

The amount will bolster the approximately R$7 billion still available within the R$44 billion previously earmarked for the program, which were not used because the number of families in the new round was lower than initially projected. Each installment has been costing around R$9 billion a month.

The extraordinary credit funds emergency expenses, and falls under the spending cap, a rule that limits spending to inflation.

The aid extension to the vulnerable is a means to maintain assistance to families while the immunization of the population against Covid-19 continues in the states and also to prevent a “gap” until the government’s new permanent social policy is launched.

Under the current design, the last installment is due in July. However, government sources acknowledged in recent weeks that “some extension is reasonable” given that the number of cases and deaths from the disease has ceased to drop. Moreover, the extension will provide more comfort until broader vaccination of the population.

Provisional measure

The extension should be implemented through a Provisional Measure. The need for a Proposed Amendment to the Constitution (PEC) to this end, as previously suggested, has lost ground because this type of credit is outside the cap, and there is room in the fiscal target (which allows for a deficit of up to R$247.1 billion in the year) to accommodate the additional spending.

Earlier this year, the government needed a PEC to pass the first R$44 billion for the new round of aid because the 2021 budget was still being processed in Congress, and there was no room in the target. According to economic team sources, there is currently no need for this.

The aid extension will also make more room in the 2021 Budget for the launch of the new permanent social policy, which will succeed the Bolsa Família (Family Grant). The reason for this is that families benefited by Bolsa Família will be “transferred” to the benefit during its validity, thereby saving the program’s budget.

Today, this Bolsa Família “surplus” within the cap is approximately R$7 billion, and it should grow with the extension of the temporary aid to the vulnerable. The money should be used to boost the new social policy.

Elections

The replacement of the Bolsa Família program must be implemented by December 2021, otherwise it will be shelved, because the law prevents the adoption of this type of measure in an election year.

The Electoral Law says that, in election year, the distribution of amounts and benefits is banned, except for social programs previously authorized by law and budgeted for the year before – in this case, in 2021.