End of coronavirus aid puts Bolsonaro’s popularity in jeopardy

The rate of Brazilian voters who disapprove of the government has consistently increased for the past month and a half.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/4474199"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <p><strong>What is happening.</strong> Here are the main reasons for the recent erosion of the president&#8217;s popularity among voters:</p> <ul><li><strong>Emergency aid.</strong> Initially set at BRL 600 (USD 112) a month, the coronavirus emergency salary was cut in half in September — and is coming to an <a href="https://brazilian.report/power/2020/08/20/what-happens-when-brazils-coronavirus-emergency-aid-ends/">end</a> after December. While the program was created by Congress, most voters <a href="https://www.poder360.com.br/poderdata/48-acham-que-bolsonaro-criou-auxilio-emergencial-42-atribuem-ao-congresso/">attributed it to the president</a>, helping his approval ratings rise among low-income voters. Approximately 60 million people benefited from the measure. The government has said on multiple occasions that there is no fiscal space to extend the program and has failed to propose a new cash-transfer initiative for 2021 onwards. These questions shall become more pressing as a <a href="https://brazilian.report/newsletters/brazil-daily/2020/11/13/brazilian-second-wave-would-be-much-deadlier-europe/">second wave of coronavirus infections</a> threatens Brazil.</li><li><strong>Inflation.</strong> Food prices are going up in Brazil — which puts an enormous burden on low-income families and breeds pessimism about the economy. Moreover, Brazil&#8217;s Producer Price Index has risen 31 percent over the past 12 months, a spike only smaller than Argentina&#8217;s.</li><li><strong>Vaccines.</strong> Most Brazilians are eager for a coronavirus vaccine — but Mr. Bolsonaro has been one of the most outspoken critics of Chinese-made immunization. This position does not sit well with more educated voters.</li><li><strong>Elections.</strong> From left to center-right, many candidates in Brazil&#8217;s big cities centered their campaigns on the rejection of Bolsonarism as a political force. Political groups who tried to associate themselves with the president in the past — such as the <a href="https://brazilian.report/power/2020/07/27/psdb-rise-fall-brazil-social-democrats-operation-car-wash/">Brazilian Social Democracy Party</a>, which is favored to win in São Paulo — now reject any association with Mr. Bolsonaro.</li></ul> <p><strong>Red flags.</strong> Worsening poll numbers make the February 2021 election for House Speaker and Senate President all the more important for the government. If Mr. Bolsonaro fails to put an ally in the Speaker seat, the risks of suffering impeachment proceedings go up, as he could see himself facing the three conditions necessary for such trials: a lack of popular support, a crippled economy, and no backing in Congress.&nbsp;</p> <ul><li>These factors all feed themselves: a bad economy can quickly erode approval ratings&nbsp;— and lawmakers tend to distance themselves from unpopular leaders.&nbsp;</li><li>As of recently, Mr. Bolsonaro has shown a better knack for building a coalition by getting close to the so-called &#8220;Big Center,&#8221; a sizable group of for-rent parties within Congress. But even he knows that the Big Center is <a href="https://brazilian.report/newsletters/brazil-weekly/2020/10/13/forget-mayors-house-speaker-election-race-counts/">not to be trusted</a>.&nbsp;</li></ul> <hr class="wp-block-separator"/> <h2>Senate passes new bankruptcy law</h2> <p>Economy Minister Paulo Guedes celebrated the approval of a new bankruptcy law by the Senate. &#8220;We are helping the economy heal faster,&#8221; he told reporters. The bill was one of Mr. Guedes&#8217;s priorities and gives him a much-needed victory. He has been frustrated by President Jair Bolsonaro&#8217;s lack of enthusiasm for unpopular reforms and even <a href="https://brazilian.report/newsletters/brazil-daily/2020/11/25/brazil-economy-minister-paulo-guedes-threatens-to-walk/">threatened to resign on Tuesday</a>.</p> <p><strong>Why it matters. </strong>The new regulation tries to modernize bankruptcy procedures and help firms get back on their feet. Here are the main changes:</p> <ul><li>Deadlines for companies to pay tax debts were extended from 7 to 10 years;</li><li>Companies in court-supervised reorganization processes will have three years to pay labor obligations, instead of just one. While the recovery lasts, however, dividends and bonuses to executives are suspended;</li><li>Creditors&#8217; meetings will be allowed to take place remotely. Moreover, creditors will be able to present a recovery plan for a failing company if they reject the original plan;</li><li>Rural producers will also be able to file for court-supervised recovery.</li></ul> <hr class="wp-block-separator"/> <h2>Petrobras presents new plan for 2021-2025</h2> <p>In a note to investors, Brazil&#8217;s federally-controlled oil and gas giant Petrobras announced the approval of its new <a href="https://api.mziq.com/mzfilemanager/v2/d/25fdf098-34f5-4608-b7fa-17d60b2de47d/4f9d1d69-e729-bc97-e582-1d305c445ba7?origin=1">Strategic Plan for the 2021-2015 period</a>, preserving the company&#8217;s pursuit of cost-cutting solutions. Moreover, it presents metrics that will directly impact the compensation not only of executives, but of all employees from 2021 onwards, such as reducing greenhouse gas emissions, debt, and the volume of leaked oil products.</p> <p><strong>Why it matters.</strong> After plunging into a massive crisis following numerous corruption scandals and years of poor management, Petrobras seems to be moving in a more positive direction. Bank of America analyst Frank McGann sees &#8220;clearer skies&#8221; for the company, and recommends clients to buy Petrobras stocks.</p> <p><strong>Debt. </strong>Between January 2019 to September 2020, Petrobras has been able to reduce its gross debt by USD 31 billion and maintain its target of USD 60 billion by 2022, despite the impacts of Covid-19 and the <a href="https://brazilian.report/newsletters/brazil-weekly/2020/09/14/latin-america-oil-industry-during-covid-19-times/">oil shock earlier in the year</a>.</p> <p><strong>CAPEX.</strong> Capital Expenditure forecast for the 2021-2025 period is USD 55 billion, of which 84 percent will go to the exploration and production of oil and gas (E&amp;P). The investment of USD 46 billion in E&amp;P involves approximately USD 32 billion, 70 percent of which in deepwater pre-salt assets.</p> <p><strong>Production. </strong>&#8220;Oil production for 2021 reflects the impacts related to Covid-19 and the divestments that occurred in 2020. We consider a variation of 4 percent up or down for 2021 production.&#8221;</p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Congress. </strong>On December 4, the Supreme Court will decide whether House Speaker Rodrigo Maia and Senate President Davi Alcolumbre will be able to run for re-election. Per the current rules, neither would be eligible for another two-year stint at the helm of congressional chambers — but both are looking for loopholes in the Constitution. Sources tell <strong>The Brazilian Report</strong> that justices are sympathetic toward letting Congress change re-election rules, as they see Messrs. Maia and Alcolumbre as capable of &#8220;<a href="https://brazilian.report/power/2020/09/02/bending-the-rules-to-counter-rule-bending-bolsonaro/">countering President Jair Bolsonaro&#8217;s penchant for authoritarianism</a>.&#8221;</li><li><strong>Elections. </strong>Recent polls show that the <a href="https://brazilian.report/power/2020/11/25/mayor-candidates-try-to-emerge-from-shadow-of-bolsonaro-and-lula/">mayoral runoff election</a> in Recife, one of the biggest cities in Brazil&#8217;s Northeast, will be a nail-biter. The race is between two cousins from traditional political families: João Campos is polling at 51 percent against Marília Arraes, who is at 49 percent. In São Paulo, the race seems to be steady, with incumbent Mayor Bruno Covas 14 points ahead of challenger Guilherme Boulos. And in Rio, the scenario is looking like a landslide win for former Mayor Eduardo Paes against incumbent Marcelo Crivella — Mr. Paes is polling 30 points ahead.</li><li><strong>Aviation.</strong> Brazil&#8217;s National Civil Aviation Agency (Anac) has overturned the decision to ground the Boeing 737 MAX airliner, following clearance from U.S. authorities. Operated in Brazil by Gol Airlines, the jet was redesigned after malfunctioning sensors caused two crashes in 2018 and 2019, killing 346 people. Boeing faced immense criticism as pilots transitioning to the 737 MAX from older models were given a short, self-administered online course that made no mention of the new systems which ended up malfunctioning. As a matter of fact, Brazilian regulators were the only ones in the world to order formal training for the 60 new features of the aircraft. <a href="https://brazilian.report/newsletters/brazil-weekly/2019/03/30/boeing-737-max-brazil-country-demand-specific-training/">We told this story back in March</a>.</li><li><strong>Vaccine.</strong> Prosecutor General Augusto Aras said on Wednesday that state administrators should be able to impose mandatory Covid-19 vaccination if the federal government fails to arbitrate on the issue. Mr. Aras said that while vaccination campaigns are coordinated nationally, states can set their own rules if they think nationwide guidelines &#8220;are not in line with local realities.&#8221;</li><li><strong>Racism.</strong> The Senate approved a change to the penal code which would increase sentences for violent crimes motivated by racism. The proposal had been dormant since 2015 and was revived after a black man was <a href="https://www.reuters.com/video/watch/black-brazilian-mans-murder-sparks-viole-id722195158">beaten to death</a> by white security guards at a Carrefour store last week. Meanwhile, public defenders want the supermarket chain and the private security company which employed the two guards to pay BRL 200 million (USD 37.5 million) in compensation to the victim&#8217;s family.</li><li><strong>Maradona.</strong> Argentina is in an official three-day mourning period after the <a href="https://brazilian.report/sports/2020/11/25/what-maradona-represents-for-argentina-and-latin-america/">death of Diego Armando Maradona</a>, who suffered a fatal heart attack at his home in Buenos Aires, weeks after undergoing emergency surgery to treat a brain bleed. Maradona distinguished himself not only for his footballing prowess, but for his political action. While most athletes in the region avoid engaging politically, Maradona used his fame and prestige to the service of <a href="https://brazilian.report/opinion/2018/07/27/ortega-maduro-brazilian-left/">left-wing leaders</a>.