Bolsonaro says emergency salary program “can’t continue for much longer”

emergency salary program brazil
President Jair Bolsonaro on August 5, 2020. Photo: Isac Nóbrega/PR

On Wednesday, President Jair Bolsonaro indicated that the federal government’s emergency salary program — created to offset the negative financial effects of the pandemic — cannot be sustained for much longer. Mr. Bolsonaro explained that the program’s monthly cost of roughly BRL 50 billion (USD 9.45 billion) is taking a huge toll on federal finances and maintaining the benefit for an extended period of time would “break the Brazilian economy.”

“The economy needs to work. And some governors insist on keeping everything closed,” Mr. Bolsonaro said during Wednesday’s morning press conference.

The emergency salary — which pays BRL 600 monthly installments to low-income families and informal workers — has been the government’s most popular measure in mitigating the financial drawbacks caused by the Covid-19 crisis. Nearly half of Brazilian households qualified for the benefit and, according to think-tank Fundação Getúlio Vargas, millions of Brazilians have been lifted above the extreme poverty line (less than USD 1.90 per day) with the extra financial aid.

The emergency cash transfer program has also been a source of renewed popularity for Mr. Bolsonaro, who is starting to focus on low-income households for much-needed public support amid countless links to impeachment requests.

Yet, with over BRL 254.2 billion already spent on financing the emergency salary program and federal tax revenue down during the pandemic, the program’s financial strains are starting to wear down the federal budget. In comparison, the Bolsa Família cash transfer program cost the public coffers BRL 95 billion for the entirety of 2019.

The emergency salary was initially designed to be a three-month benefit running from April to June, but it has already been extended for two additional months, following Brazilian businesses needing to remain closed due to half-hearted isolation rates in the country.

Despite Mr. Bolsonaro’s comments, the Economy Ministry is studying the possibility of extending the emergency salary at a reduced installment rate until at least the end of 2020. Economy Minister Paulo Guedes has also suggested the creation of a new permanent cash transfer program named “Renda Brasil” (Income Brazil) to fully replace Bolsa Família in the near future.

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