Coronavirus

How the Covid-19 emergency aid impacts Brazil’s finances

Covid-19 emergency aid has kept Bolsonaro's approval ratings stable, but does the government have the firepower to sustain it?

How the Covid-19 emergency aid impacts Brazil's finances
President Jair Bolsonaro and members of his cabinet outside of the presidential palace. Photo: Carolina Antunes/PR

Despite many mistakes, delays, and glitches, the three-month BRL 600 (USD 107) emergency salary created in March is the Brazilian government’s key policy to curb the devastating economic impacts of Covid-19. Eligible beneficiaries include informal workers, single or teenage mothers, and the so-called “individual entrepreneurs.” The much-needed cushion, even if small, could be a matter of life and death to millions of families — and has helped improve President Jair Bolsonaro’s approval ratings up among lower-income voters.

At first, the government’s economic team had put forward a very conservative aid proposal of only BRL 200 per month — before it was increased by lawmakers. But senior government officials are putting their foot down when it comes to calls for a universal basic income system, or at least an extension of the emergency aid. Economists at think tank Fundação Getulio Vargas estimate that a permanent aid plan would cost 20 times as much as Bolsa Família — the much-heralded conditional cash-transfer program that lifted millions from extreme poverty in the 2000s.

For Treasury Secretary Mansueto de Almeida, the idea is “fiscally impossible.” He told newspaper O Estado de S.Paulo: “Emergency aid is, as the name suggests, for emergencies only.”

However, the thought of extending the aid has begun to gain traction in Brasília, as we have reported on our Covid-19 Live Blog. Even Economy Minister Paulo Guedes has publicly voiced the idea — with a crucial caveat, however. Mr. Guedes said an extension would mean workers would get only an additional of BRL 600 — paid either at once or in three BRL 200 installments. 

Extending the aid would impact at least the...

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