Emergency salary could be extended amid budget imbroglio

Emergency salary could be extended amid budget imbroglio
President Bolsonaro and Economy Minister Paulo Guedes. Photo: Carolina Antunes/PR

The government’s House whip Ricardo Barros said the coronavirus emergency salary scheme — which is set to expire at the end of the month — could be extended if Congress delays a constitutional amendment bill capping court-ordered debt repayments scheduled for next year. The proposal would free up budget space to allow the government to finance a new cash-transfer policy.

While the new Auxílio Brasil program would cost the government an extra BRL 30 billion (USD 5.31 billion), extending the emergency salary scheme through 2022 would jack up spending to BRL 80 billion, Mr. Barros told finance newspaper Valor. The resources would not be included under public spending cap calculations.

Under the emergency salary scheme, 34.4 million families receive monthly stipends of between BRL 150 and 350. That number of beneficiaries is twice as many as those who receive payments under the world-renowned Bolsa Família program. The Covid-19 emergency aid is credited with reducing Brazil’s inequality during the pandemic and preventing 21 million people from falling under the poverty line.

However, economists warn about the risks of breaching the federal spending cap, as it is the main anchor of fiscal stability in the country, especially during a period of spiraling inflation.