Brazil lagging behind in anti-Covid-19 measures

. Mar 25, 2020
How much is Brazil actually spending against Covid-19? Photo: RHJPhtotoandilustration/Shutterstock

We’re covering the government’s efforts for economic relief against Covid-19. Jair Bolsonaro’s inflammatory address to Brazilians. And the possibility of a “war effort” in Brazil.

How much is Brazil actually spending against Covid-19?

Almost

every day over the past week, the Economy Minister has announced some form of new measure to ease Covid-19&#8217;s blow to the Brazilian economy. Many solutions involve bringing forward expenses that had already been budgeted, as opposed to bringing any &#8220;new money&#8221; to help fight the problem. Investment bank BTG Pactual came up with an estimation of the total amount to be spent by the government and public banks: BRL 478 billion so far (USD 93.7 billion).</p> <p><strong>Why it matters.</strong> Without government intervention, economies will not be able to weather the storm. But actions in Brazil so far dwarf what other countries are doing. The U.S. government, for instance, has proposed a USD 2 trillion stimulus package—which is more than Brazil&#8217;s entire GDP.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/1675809"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>Breakthrough.</strong> The lion&#8217;s share of the money announced by the government is aimed at keeping the economy on track, rather than providing the resources for containing the virus. Only BRL 11.8 billion are unmistakenly going to the Health Ministry—with another BRL 8 billion going to state and municipal health authorities. Public banks will open BRL 3 billion in credit lines for local administrations to finance equipment purchases and health-related projects.&nbsp;</p> <p><strong>Impact on the budget.</strong> Last week, Congress approved a &#8220;state of calamity,&#8221; allowing the federal government to disrespect primary deficit goals. Predicted at BRL 124 billion, the deficit could go as high as BRL 200 billion, according to some estimates.</p> <ul><li>Itaú BBA foresees the primary deficit increasing to 3.1 percent of GDP in 2020, from previous estimates of 1.1 percent. For 2021, the bank has also reviewed its projection to 0.8 from 0.6 percent of GDP.</li></ul> <p><strong>Another front.</strong> As we reported on <a href="https://brazilian.report/newsletters/brazil-daily/2020/03/24/sources-political-leaders-negotiate-bolsonaros-impeachment/">yesterday&#8217;s Daily Briefing</a>, the Central Bank has been active to ensure the solidity of the country&#8217;s financial system—announcing measures amounting to BRL 1.2 trillion. According to Levante Investimentos, that is 16.7 percent of the GDP, or five times more than the <a href="https://www.bbc.com/portuguese/reporterbbc/story/2008/11/081115_g20_lula.shtml">aid package</a> applied following the 2008 financial crisis.</p> <p><em>—with Natália Scalzaretto</em></p> <hr class="wp-block-separator"/> <h2>More isolated, more radical</h2> <p>At 8:30 pm on Tuesday, Jair Bolsonaro addressed the nation and gave a speech that left many observers flabbergasted. Despite the rapid progression of Covid-19 in Brazil, he urged for an end to confinement measures, called worries about the outbreak &#8220;hysteria&#8221; once again, and said people shouldn&#8217;t worry about the novel coronavirus. &#8220;What is happening around the world shows that 60-plus people are the ones at risk. So why close schools? [&#8230;] Ninety percent of us won&#8217;t show any symptoms.&#8221; The president accused the media of fear-mongering and said governors&#8217; decisions to quarantine their states will be detrimental to the economy.</p> <ul><li>Once again, Mr. Bolsonaro seems to be mimicking U.S. President Donald Trump. Hours before, Mr. Trump pledged to have his country—en route to becoming the new center of the pandemic—<a href="https://www.politico.com/news/2020/03/23/trump-coronavirus-lockdown-skepticism-143800">back at full speed by mid-April</a>. &#8220;Our country wasn’t built to be shut down,&#8221; he said.</li></ul> <p><strong>Why it matters.</strong> Four sources told our Brasília correspondent Brenno Grillo yesterday that behind-the-scenes impeachment talks have already started. Increasingly isolated, Mr. Bolsonaro is gambling on the only strategy he has ever had: open conflict.</p> <ul><li>If economic catastrophe comes, he will blame it on state governors and the media for not allowing his administration to save businesses from crashing. If the epidemic is contained, he will gloat that there was nothing to worry about in the first place.</li></ul> <div class="flourish-embed" data-src="story/228395"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>Pans and pots.</strong> For the eighth straight day, big urban centers saw citizens protesting against Mr. Bolsonaro from their window sills, banging pots and pans and cursing the president.</p> <p><strong>Alone.</strong> Less than two hours before the presidential address, Army Commander Edson Leal Pujol published a video saying the coronavirus might be &#8220;the most important mission of our generation.&#8221; The Armed Forces are growing increasingly frustrated with Mr. Bolsonaro, who reportedly &#8220;didn&#8217;t read or ignored&#8221; a January intelligence briefing warning about the risks of Covid-19.</p> <p><strong>Transparency.</strong> Just after saying that 60-plus people are in a high-risk group, the 65-year-old president said he would not be in danger even if he were to be contaminated, thanks to his &#8220;history as an athlete,&#8221; and that the virus wouldn&#8217;t give him more than a &#8220;little cold.&#8221; That line once again sparked doubts around whether or not he is actually infected. Let us explain:</p> <ul><li>At least 22 people who traveled with him to the U.S. two weeks ago tested positive. The president was tested twice, saying the results came back negative—but refused to disclose them.</li><li>The hospital in which he was tested refused to identify two of the 17 people found to be infected by its doctors—despite a court order.</li><li>Over the weekend, Mr. Bolsonaro signed a decree lifting the government&#8217;s obligations to answer solicitations made via the Access to Information Act.</li></ul> <p><strong>Taunting.</strong> On Tuesday, São Paulo Governor and presidential hopeful João Doria tested himself against Covid-19 and published his negative result on Twitter—a veiled shot at the president.</p> <hr class="wp-block-separator"/> <h2>Pitching in for the &#8220;war effort&#8221; in Brazil</h2> <p>As Congress negotiates several bills to cushion the economic blow of the coronavirus crisis, House Speaker Rodrigo Maia argued in favor of creating a &#8220;war budget,&#8221; containing emergency measures separated from the regular budget. He wants money for the anti-Covid-19 effort to be taken from the tax budget and social security.</p> <p><strong>Why it matters.</strong> The speaker wants to avoid contaminating the 2021 budget by increasing public spending to fight the pandemic. In other crises, anti-cyclical measures went from being palliative maneuvers to becoming permanent features of the federal budget.</p> <p><strong>Votes.</strong> Lawmakers are expected to vote today on a BRL 200 basic income for informal workers. Over the next few days, they are also expected to pass a financial aid plan for state administrations that commit to austerity measures in the future.</p> <p><strong>Do over.</strong> On Sunday, the president signed a provisional decree allowing companies to suspend contracts (and salaries) for up to four months. The enormous backlash forced him to backpedal, but his economic team is currently drafting a slightly modified version of the proposal. It would allow contract suspensions for up to three months—the government would then pay for the salaries (at a total cap of BRL 15 billion). Economists, however, say the move could severely harm a large portion of workers who can&#8217;t afford to have savings.</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Brazilians abroad.</strong> With the suspension of commercial international flights to and from Brazil, the Foreign Affairs Ministry is relying on chartered planes to bring home citizens who are currently abroad. Since the Covid-19 outbreak began, roughly 5,200 Brazilians were repatriated—but at least 7,000 more are pleading to return. The ministry is waiting for the government to clear BRL 50 million in order to fund more repatriation flights.</li><li><strong>Down tools.</strong> Foreign companies in Brazil are starting to reduce production as a measure to contain the coronavirus spread. On Tuesday, agricultural machine manufacturer John Deere shut down some of its plants—while reducing work hours in others. Meanwhile, tech producer Samsung has suspended activities in one of its factories for at least five days. Electronic manufacturers have an additional problem: the slowdown of the Chinese economy in past weeks has created a shortage of inputs.</li><li><strong>Masks.</strong> Starting today, prisoners in the state of São Paulo will start producing face masks to be used by health professionals in efforts against the coronavirus—at an estimated rate of 26,000 per day. In exchange for their work, inmates will have part of their sentences reduced.</li><li><strong>Stocks.</strong> After successive losses, the São Paulo stock exchange&#8217;s benchmark index rose by 9.7 percent yesterday—typical of the rollercoaster fluctuations we have seen in this uncertain period. Meanwhile, the Brazilian Real recovered some ground against the U.S. Dollar—but the foreign exchange rate remains above the BRL 5 mark, at USD 1 : BRL 5.0820.

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