Guedes Points to Emergency Aid Extension, Reiterates Closeness to Bolsonaro

RIO DE JANEIRO, BRAZIL – Minister of Economy Paulo Guedes on Wednesday referred to the extension of the emergency aid benefit payments, but at a lower amount, and in a statement at the Planalto Palace, said he was close to President Jair Bolsonaro, again noting mutual trust.

“The emergency aid [reached] 64 million Brazilians,” he said.

“We are studying this, the President was instructing us just today to launch this aid in the future. Evidently, there are no resources to pay the R$600 (US$120), but the President is saying ‘let’s try to do as much as possible within the resources we have to stretch this out’,” he said.

Guedes said that with the boom in building construction, solid exports, and credit programs, Brazil is rebounding from the crisis in a V shape, but “a Nike [swoop logo] sort of V,” with a rebound slower than the drop.

The economic team is studying the issue of a Provisional Measure (MP) to grant emergency aid for a while longer, but at a lower amount, while continuing to analyze the focus of social programs to enhance the Bolsa Família and make it a hallmark of the Jair Bolsonaro administration, according to two team members.

One of Reuters’ sources pointed out that the figure for the aid extension has not been defined. If the President were only to issue a new decree to extend it – as he did in June – the benefit would have to remain at R$600, a level considered high given its fiscal implications.

Each month of aid in this amount entails additional expenses of some R$50 billion for the federal government, considering the universe of its over 60 million beneficiaries, among casual workers and vulnerable people who were already part of the social protection system.

The intention now is that the aid will be extended for a lower amount, as a kind of bridge to the new program ahead.

For the economic team, the plan is that Renda Brasil, the program that will come to replace the Bolsa Família, will fall between R$250 and R$300 per month, the second source added, pointing out that this will depend on the number of programs that can be grouped under the same umbrella.

At the start of the Covid-19 pandemic, the Bolsonaro government released a proposal for a grant of R$200, closer to the average granted by the Bolsa Família at the time (R$180), while Congress worked on a text that provided for a R$500 grant. Ultimately, legislators passed a R$600 benefit with the President’s blessing.

Initially planned for the months of April, May, and June, the aid will now run until August, at a total cost of R$254.4 billion – the government’s most significant action in tackling the crisis.

The aid has also been increasingly seen as an electoral asset for Bolsonaro, after Datafolha’s survey last week showed increased approval of the President, his best since the start of his term of office.

In Minister Paulo Guedes’ team, the assessment is that the aid raises support for the President while ensuring a stronger economic rebound by encouraging consumption, said a third source. This would promote growth at a faster pace than would be achieved with the promotion of public works.

Publicly, Guedes has already praised ex-president Luiz Inácio Lula da Silva for the Bolsa Família, pointing out that the initiative had improved the lives of a large contingent of Brazilians at a relatively low cost, which is why the leftist’s re-election might have been deserved.

Currently, the Bolsa Família budget is about R$30 billion per year. With Renda Brasil, the government intends to raise this figure, adding sums that are currently allocated to other benefit programs such as the salary bonus and the closed fishing season insurance, considered ineffective in transferring income to the poorest population segments.

The plan is to make the Renda Brasil a trademark of the Bolsonaro government, associated with the improvement of people’s quality of life, just as was the case with the Bolsa Família for Lula and PT (Worker’s Party). While the edges are trimmed to introduce the program amid the challenges imposed by the spending ceiling rule, the emergency aid should again be the path chosen by the government for direct injection of resources into the economy.

New Protection System Register

According to Reuters, the structuring of the Renda Brasil also involves a new system for the Protection System Register (Cadastro Único), which is the instrument used to identify qualified low-income families.

It is currently operated by Caixa Econômica Federal (Federal Savings Bank), which forwards to the Ministry of Citizenship every month an printout of the database, whose system is under the bank’s responsibility.

Ministry of Citizenship officials consider this model inadequate, as it ultimately leads to the creation of multiple databases for specific uses of each government program, as well as delays in validating registrations. The intention now is for the portfolio to take over this administrative role from the Caixa, thereby internalizing the system.

Source: Reuters