Central Bank: Brazil should aid companies, not people

. Nov 06, 2020
Central Bank Chairman Roberto Campos Neto. Photo: Marcelo Camargo/ABr Central Bank Chairman Roberto Campos Neto. Photo: Marcelo Camargo/ABr

This newsletter is for PREMIUM subscribers only. Become one now!

Today, we discuss the Central Bank chairman’s priorities for the economy. A massive hack that could have spread around many government agencies. And what’s new about the November 15 election.

Central Bank chairman wants government to aid companies, not people

During an event broadcast online, Central Bank Chairman Roberto Campos Neto argued that the Brazilian government should

concentrate on supporting companies — and not individuals — when drafting new financial aid policies. Mr. Campos Neto cited a &#8220;considerable&#8221; recovery in the amount of hours worked in the country, which would drive income back up. &#8220;That leads us to believe that now is the time to do more for companies rather than individuals. That is our mindset now,&#8221; he said.</p> <ul><li>Brazil&#8217;s unemployment rate is setting records week after week, currently at <a href="https://g1.globo.com/economia/noticia/2020/10/30/desemprego-no-brasil-sobe-para-144percent-em-agosto-diz-ibge.ghtml">14.4 percent</a>. Many economists, however, believe that the worst is yet to come, and warn that pulling direct aid from people could lead to a massive poverty crisis. During the pandemic, government aid has been the <a href="https://brazilian.report/power/2020/08/20/what-happens-when-brazils-coronavirus-emergency-aid-ends/">sole source of income</a> for tens of millions of Brazilians.</li><li>Relief programs have topped USD 107 billion, or <a href="https://brazilian.report/newsletters/brazil-daily/2020/10/28/central-bank-to-weigh-in-on-brazil-enhanced-fiscal-risk/">8.4 percent of GDP</a>. According to monitoring by the Senate, almost half of that spending was on the coronavirus emergency salary, set to end in the new year.&nbsp;</li><li>According to the Brazilian Institute of Applied Economic Research, the aid <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/08/27/emergency-aid-essential-to-recover-brazilians-income/">provided BRL 28.5 million</a> (USD 5.1 million) for the national economy in July — 16 percent more than the total income lost among formally employed workers</li></ul> <p><strong>Why it matters.</strong> A welfare program could be well beyond the government&#8217;s financial means, but President Jair Bolsonaro has indicated that he wants some sort of aid to continue in 2021 — eyeing the political gains of such policies.</p> <ul><li>The tug of war between deficit hawks and political cabinet members opposes two things that are dear to the government: popular support and investors&#8217; confidence.</li></ul> <hr class="wp-block-separator"/> <h2>Massive hack puts Brazilian government on alert</h2> <p>The Federal Police and a group of information security experts are <a href="https://brazilian.report/tech/2020/11/05/massive-hackers-attack-brazilian-government-on-alert/">investigating a hack</a> of the Superior Court of Justice&#8217;s digital system. An unknown group infected the network of Brazil’s second-highest judicial body on Tuesday, in what seems to be a typical case of ransomware — when data is encrypted and hackers demand money to return it. Since then, justices have been unable to access their emails or any of the 250,000-plus cases under their jurisdiction.&nbsp;</p> <ul><li>As a means of damage control, the court’s IT department has taken its website off the air. So far, the problem remains unsolved — and its origin, unknown. The court, however, says it has backed up all of its case files.</li><li>The hack was likely made possible due to vulnerabilities generated by users remotely accessing the court’s network from home — using unprotected internet connections. That <a href="https://obastidor.com.br/justica/tecnico-responsavel-pelo-firewall-do-stj-trabalhava-de-casa-23">includes the IT expert</a> responsible for the network&#8217;s firewall, which is a major no-no in terms of information security.</li></ul> <p><strong>Other attacks.</strong> Multiple other government agencies were attacked this week — though it remains unclear whether the same perpetrators were responsible. Systems running the local government of Brasília and even the Health Ministry were reportedly infected.</p> <ul><li>In the wake of the attacks, the Superior Electoral Court announced a plan to beef up its data protection efforts before the November 15 municipal elections. And the president&#8217;s chief security officer has ordered a sweep of all networks used by Jair Bolsonaro to identify any possible breach.</li></ul> <p><strong>Why it matters.</strong> The episode shows that Brazil has learned nothing from its past mistakes and government systems remain highly vulnerable to malicious attacks.</p> <hr class="wp-block-separator"/> <h2>Election Roundup: nine days to go</h2> <p>While the eyes of the world are fixed on the U.S. presidential election, Brazilian mayoral candidates continue to campaign ahead of the November 15 vote. Here are the most noteworthy news from major municipal races:</p> <ul><li><strong>São Paulo.</strong> Incumbent Bruno Covas has pulled away from the chasing pack, polling at 28 percent. But his adversary in the runoff stage remains unknown, with three candidates virtually tied for second: conservative Congressman Celso Russomano, leftist Guilherme Boulos, and centrist former Governor Márcio França. Mr. Russomano, who once led the polls, seems to be the least competitive of the three. Not only are his poll numbers crashing, but his rejection rates jumped from 21 to 47 percent since late September.</li></ul> <div class="flourish-embed flourish-chart" data-src="visualisation/4258791"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <ul id="block-163e9e5d-bd70-4199-8df8-39e20b25a40e"><li><strong>Workers&#8217; Party.</strong> The political family of former President Luiz Inácio Lula da Silva chose not to back another party in São Paulo, and now looks on in disbelief as its candidate Jilmar Tatto polls at only 6 percent in Brazil&#8217;s biggest city. The party has shifted its efforts (and money) to other races in the Greater São Paulo Area — it has competitive candidates in the cities of Guarulhos, Diadema, and Osasco. Party officials say that winning two out of these three races would keep the party&#8217;s chin up.</li><li><strong>Environment not an issue.</strong> In the city of Corumbá — which sits in the heart of the Pantanal wetlands — environmental issues have been excluded from municipal debates, despite the region being severely hit by months-long wildfires, which hurt local agricultural producers. Most candidates face corruption allegations, the race has been centered around their efforts&#8217; to discredit each other.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Environment. </strong>Vice President Hamilton Mourão denied that the Jair Bolsonaro administration bears any responsibility for record-high deforestation rates caused by fires in the Amazon and <a href="https://brazilian.report/newsletters/brazil-weekly/2020/09/21/rains-reach-brazil-pantanal-wetlands-but-damage-is-done/">Pantanal wetlands</a>. He said deforestation had been on the rise before the current government took office, merely saying that “the tipping point&#8221; happened to occur during this administration. While it is true that deforestation has crept up over the past decade, <a href="https://brazilian.report/environment/2019/08/22/amazon-deforestation-bolsonaro-fires/">fire outbreaks have grown disproportionately since 2019</a>, when President Bolsonaro took office.</li><li><strong>Agriculture. </strong>Despite being the world&#8217;s largest soybean producer, Brazil is having to rely on imports to compensate for stock shortages — after massive exports to China in H1 2020. Between January and October, Brazil bought over 600,000 tons of soybeans from abroad, a 379-percent jump from the same span in 2019. Initially, Paraguay was the main supplier — but demand has shifted to the U.S. in recent weeks. The imports, however, come at a time when soybeans are roughly 10 percent more expensive, and offset many of the gains registered in previous months.</li><li><strong>Stock market.</strong> Democratic candidate Joe Biden is inching closer to winning a majority of Electoral College votes in the U.S. election — and his probable victory is exciting investors. Since the beginning of the week, Brazil&#8217;s Ibovespa stock index has risen from the 94,000-point mark to over 100,000 points. Meanwhile, the Brazilian Real has gained some ground, as investors become less risk-averse.</li><li><strong>Outage.</strong> All but two municipalities in the northern state of Amapá remain without electricity, after an energy distributing plant was damaged by a fire. The power outage has also disrupted water supplies, causing colossal queues at supermarkets for bottled water. Internet access and telephone networks have been disrupted, and the local government has declared a 30-day state of emergency. The Mines and Energy Ministry expects to re-establish up to 70 percent of the power supply by the end of today — however, it could take up to two weeks for the problem to be fully resolved.</li><li><strong>Bolivia.</strong> A spokesperson for the Movement for Socialism (MAS) party said Bolivia&#8217;s <a href="https://brazilian.report/newsletters/brazil-weekly/2020/10/19/argentina-wheat-crop-crisis-raises-alarm-bells-in-brazil/">President-elect Luis Arce</a> survived a <a href="https://www.telesurenglish.net/news/Bolivias-President-Elect-Luis-Arce-Attacked-With-Dynamite-20201106-0001.html">dynamite attack</a> while attending a meeting in the party&#8217;s La Paz headquarters. No injuries were reported — and the Bolivia police are investigating the case.

Read the full story NOW!

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