The coronavirus risks within Brazil’s presidency

. Mar 12, 2020
fabio wajngarten covid-19 Businessman Alvaro Granero, U.S. VP Mike Pence, President Donald Trump, and Fábio Wajngarten during a dinner at Mr. Trump's Florida Mar-a-Lago luxury resort. Source: Instagram (@fabiowajngarten)

As the WHO declares Covid-19 a global pandemic, Brazil’s press secretary is tested for the disease (he traveled with President Bolsonaro and met U.S. President Donald Trump over the weekend). And the new defeat imposed by Congress on the government.

This text has been updated.

Covid-19 reaches Brazil’s presidential palace


government&#8217;s Press Secretary Fábio Wajngarten has tested positive for the novel coronavirus after returning from an official visit to the U.S. According to <em>Folha de S. Paulo </em>columnist Monica Bergamo, who broke the story, Mr. Wajngarten will get the results today.</p> <p><strong>Why it matters.</strong> Mr. Wajngarten&#8217;s office is located within the presidential palace. And he was part of a Brazilian delegation headed by President Jair Bolsonaro that met U.S. President Donald Trump and Vice President Mike Pence on Saturday.</p> <ul><li>A <a href="">Japanese study</a> suggests that pre-symptomatic transmission plays a key role in the outbreak. If Mr. Wajngarten tests positive, it means the Brazilian president—as well as the U.S. president and VP—could also have been exposed to the virus.</li></ul> <p><strong>Reaction.</strong> São Paulo&#8217;s Albert Einstein Hospital wouldn&#8217;t confirm nor deny the report. On Wednesday evening, Mr. Wajngarten vented on Twitter—but didn&#8217;t exactly deny the news: “The rotten media has already talked about my religion, my family, and <a href="">my company</a>. Now they are talking about my health. But I am well.”</p> <p><strong>20 harsh weeks ahead.</strong> With 69 cases, <a href="">Health Minister Luiz Henrique Mandetta</a> said Brazil is about to face a boom in confirmed infections in what will be &#8220;a harsh 20 weeks ahead.&#8221; At the new, upcoming stage, transmissions will happen locally and <a href="">the path of the virus</a> will no longer be clear. The Pensi Institute, a São Paulo-based health research center, says Brazil could have as many as 4,000 infections within 15 days—and 30,000 in 21 days.</p> <ul><li>Mr. Mandetta says it is hard to determine when will the public healthcare system be overwhelmed to the point of not being able to treat patients, due to regional differences. &#8220;Rio de Janeiro can handle very little. São Paulo, a little more. Paraná has the country&#8217;s best [healthcare] network … Brazil is a continent,&#8221; he told reporters.</li><li>The government has asked state administrations to analyze large events scheduled for the next few months to study the possibility of canceling them. Meanwhile, the Education Ministry is mulling over suspending classes. That move, however, could trigger a hunger problem, as school lunches are the most important meal many children living in peripheral areas have access to.</li><li>The president&#8217;s press office—led by Mr. Wajngarten—has shared a call to action on social media for pro-government protests scheduled for March 15. The event was jokingly called by members of the opposition as &#8220;Corona-palooza.&#8221;</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/1541240"><script src=""></script></div> <p><strong>Money. </strong>Mr. Mandetta visited with lawmakers on Wednesday, pleading for at least BRL 5 billion in parliamentary budget grants to be used in <a href="">efforts to curb the Covid-19 outbreak</a>. President Bolsonaro should sign a provisional decree allowing the immediate clearance of funds, but it must be confirmed by Congress.</p> <p><strong>Inflation.</strong> The Health Ministry has ordered more purchases of hand sanitizer, saline solution, gloves, and 20 million masks—products that could be stocked if they end up not being necessary. However, the government says masks are costing 18 times more now than at the beginning of the year.</p> <div id="buzzsprout-player-2981242"></div> <script src=";player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>Congress imposes massive loss on Bolsonaro</h2> <p>In a joint session, Congress decided to strike down a presidential veto reducing expenditure on pension benefits for lower-income elderly citizens. Lawmakers doubled the maximum monthly income to qualify for the Continuous Payment Benefit (BPC), from BRL 261 to 522—creating BRL 20 billion in additional annual expenses for the federal administration.</p> <p><strong>Why it matters.</strong> Treasury Secretary Mansueto Almeida said the move makes it impossible for the government to respect the federal spending cap in 2021.</p> <ul><li>According to the cap, passed in 2016, the government cannot create new expenses without cutting from other areas. But following 3-plus years of austerity measures, there is little room to cut, as most of the budget is made up of mandatory expenses such as pensions and salaries.</li></ul> <p><strong>Collision course.</strong> What Congress did on Wednesday is an unmistakable shot at President Bolsonaro, who has openly called for his supporters to take to the streets and <a href="">protest against Congress this Sunday</a>. Relations between the two branches of power have always been tense under Mr. Bolsonaro, but they worsened at the end of last year with the government and lawmakers staging a tug of war for control over the federal budget.</p> <p><strong>Public spending bombs.</strong> The current crisis bears some similarities to the war between the government and Congress when Dilma Rousseff was president—when lawmakers increased public spending with the intention of making her administration inviable. Then-House Speaker Eduardo Cunha—who later went on to orchestrate Ms. Rousseff&#8217;s impeachment—approved a series of bills to inflate the government&#8217;s expenses, measures he called &#8220;public spending bombs.&#8221; It doesn&#8217;t mean that Jair Bolsonaro will have the <a href="">same political fate Ms. Rousseff had</a>—but the red flags are there.</p> <div id="buzzsprout-player-2913238"></div> <script src=";player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Circuit breaker.</strong> For the second time this week, the São Paulo stock market <a href="">activated a circuit breaker</a> after its benchmark index Ibovespa crashed 10 percent during the day. After the intermission, the index slightly recovered—closing the day down 7.6 percent. Consultancy firm Economatica reported that companies listed in São Paulo lost a combined BRL 249 billion in market value on Wednesday alone. Expect more turmoil today, as <a href="">Asian markets continue to fall on Thursday</a>.</li><li><strong>Denial?</strong> The government has decreased its <a href="">GDP growth projections for the year</a>, from 2.4 to 2.1 percent. Analysts, however, consider the forecast overly optimistic, with China&#8217;s economy expected to pick up only in Q3 2020. While the median forecast by top-rated investment firms was at 1.99 percent on Monday, some banks already talk about a mere 1.4-percent growth in 2020.</li><li><strong>Oil.</strong> Petrobras has informed that its pre-salt deepwater Búzios oil field has reached record-setting production levels. The four platforms in the region posted a daily output of 640,000 oil barrels—and 790,000 barrels of oil equivalent. Hit by the <a href="">oil crisis</a> that has been unfolding since the weekend, however, Petrobras shares are taking a hit this week, and the company has lost BRL 196 billion in market value this year.</li><li><strong>Leaks.</strong> News website <em>The Intercept Brasil</em> has published a new batch of <a href="">leaked messages exchanged by members of Operation Car Wash</a>. This time, they concern a meeting between Brazilian prosecutors and members of the U.S. Department of Justice, a collaboration to investigate corruption at Petrobras. The report says the October 2015 meeting was kept secret from the federal government, as prosecutors feared the Justice Ministry could tamper with the probe.

Our content is protected by copyright. Want to republish The Brazilian Report? Email us at