Brazil’s vaccination plan raises more questions than answers

. Dec 17, 2020
vaccination plan Health Minister Eduardo Pazuello, President Bolsonaro, and Zé Gotinha, a mascot for vaccination campaigns in Brazil. Photo: Isac Nóbrega/PR

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Today, we talk about Brazil’s open-ended vaccination program. The risk of losing voting rights in the UN General Assembly. And promises for green development and reforms.

2021: A make or break year for Brazil?

In 2021, President Jair Bolsonaro will have to walk a dangerous tightrope. He must lead the country into economic recovery — which requires the approval of structural reforms — while preserving his political capital among the electorate. Welfare programs are set to expire completely at the end of the year due to budgetary constraints. Without a safety net, Brazil’s record unemployment rate could explode, fueling social dissatisfaction.

History tells us that the combination of poor economic performance and low popularity is a dangerous cocktail for Brazilian presidents. For Mr. Bolsonaro, 2021 will determine whether he will go down as the man who steered Brazil out of the coronavirus crisis, or if his administration will implode along the way. 

To learn about the challenges Brazil will face in 2021, we have prepared an exclusive special report. Take a peek at the table of contents:

  • Vaccine race will decide Brazil’s coronavirus fate
  • Economy: Brazil avoids the worst but future remains open-ended 
  • Brazilian agro faces enormous pressure
  • Big capital tries to force Brazil to go green
  • Congress leadership vote key to government’s success
  • How to mend fences with top trading partners
  • Tech gap a major bottleneck for 2021

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Brazil’s open-ended vaccination plan

The federal government has finally presented its vaccination plan for 2021, but the document is

lacking in detail and fails to address some of the most pressing questions about how coronavirus immunization will be carried out in the country.</p> <ul><li><strong>More vaccines.</strong> The government increased the number of doses it plans to obtain from 300 million to 350 million. That refers only to the AstraZeneca vaccine, as well as shots coming from the UN-backed COVAX facility — but does not include the total purchased from Pfizer, with whom Brazil has <a href="https://www.reuters.com/article/us-health-coronavirus-brazil-pfizer/brazil-in-advanced-talks-to-buy-70-million-doses-of-pfizer-covid-19-vaccine-health-ministry-idUSKBN28I05V">signed</a> a memorandum of intent to buy 70 million doses.</li><li><strong>Vaccination dates.</strong> Health Minister Eduardo Pazuello says the Brazilian government will begin distribution of Covid-19 vaccines in February — after previously forecasting immunization in December, January, and March. &#8220;Why so anxious?&#8221; he asked reporters, adding that the logistics of vaccinating over 210 people will be &#8220;simple.&#8221;</li></ul> <p><strong>CoronaVac. </strong>The Jair Bolsonaro administration appears to have gone from shunning the Chinese-made CoronaVac to wanting control over all doses produced in Brazil. A deal for 45 million doses has been discussed with Butantan, the biological institute tied to the São Paulo state government which conducted clinical trials on CoronaVac in Brazil. The agreement includes a provision that would destine all shots to the national vaccination program.&nbsp;</p> <ul><li>Many question marks remain about this deal, as the government has reportedly offered no detail on its plans. &#8220;There was a feeling [among São Paulo representatives] that the federal administration is stalling,&#8221; <a href="https://www1.folha.uol.com.br/equilibrioesaude/2020/12/butantan-e-governo-conversam-mas-nao-se-entendem-sobre-coronavac.shtml">reports</a> newspaper Folha de S.Paulo. Additionally, the government&#8217;s intention of getting all vaccines for its national program would prevent Butantan from exporting shots to other countries, as is its plan.</li><li>Moreover, we cannot rule out political interference in the process, as the CoronaVac is being developed by the state of São Paulo — and São Paulo Governor João Doria and Mr. Bolsonaro have turned vaccination efforts into their own political face-off. Mr. Doria announced earlier this month that his state would begin administering CoronaVac shots on January 25, and the deal would frustrate his plans to be the first state in Brazil to do so.</li><li>Throughout his presidential term, Jair Bolsonaro has adopted something of a &#8220;push-pull&#8221; strategy during political and public relations crises. After sticking vehemently to a hardline stance on a given issue, he has a habit of giving temporary tokens of moderation, before snatching them away once more. There is every likelihood that President Bolsonaro is doing the same vis-a-vis CoronaVac.</li></ul> <p><strong>Mandatory vaccination?</strong> Meanwhile, the Supreme Court began a trial on whether vaccination should be made mandatory. For the case&#8217;s rapporteur, authorities can impose sanctions on non-immunized citizens — adding that states and cities have power over their own jurisdiction in the absence of federal rules. The trial resumes today, with the opinions of the remaining 10 justices.</p> <p><strong>Bottom line.</strong> The Brazilian government&#8217;s denialist stance on the pandemic is taking its toll. At this point, the CoronaVac is the federal government&#8217;s only immediate option, as it has no precise information on when other labs can provide their vaccines and how many doses it could obtain.</p> <p><strong>Outbreak. </strong>Brazil recorded over 70,000 new cases yesterday — a record. The country topped the 7-million-case mark, and data shows that the spread is now happening faster. It took 34 days for the total to jump from 4 to 5 million, and 44 days to go from 5 to 6 million. But Brazil&#8217;s last 1 million cases were recorded in just 26 days. New deaths reached 968, the highest since September 15.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/4692692"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>Debts could see Brazil lose UN voting rights&nbsp;</h2> <p>The government has failed to approve a bill in Congress granting USD 558 million in funds to pay its debts to multi-lateral organizations —&nbsp;including the United Nations, the World Trade Organization, and the BRICS bank. Without the government&#8217;s whip in Congress present to lead negotiations, multiple independent parties were able to block the vote.</p> <p><strong>Why it matters. </strong>Brazil has until the end of the year to pay at least USD 113 million in accumulated arrears of USD 391 million — or else it could lose its voting rights in the UN General Assembly as of January 1, 2021, in what would be a major fiasco for the country that delivers UNGA&#8217;s opening address every year.</p> <ul><li>Many high-profile countries are in arrears with the UN, including the U.S. — but no nation has been so close to losing its vote so often. The situation precedes President Jair Bolsonaro, and Brazil faced a <a href="https://uk.reuters.com/article/uk-un-brazil/brazil-could-lose-its-u-n-vote-due-to-debt-idUKKBN1Y81SX">similar scare</a> last year but managed to make the necessary payments in time.</li></ul> <p><strong>Yes, but … </strong>Congress is approaching the end of the legislative term, and with the Budgetary Directives Law out of the way (more below), many lawmakers are already on vacation mode. Government officials are scrambling to get the necessary votes for this morning&#8217;s session.</p> <hr class="wp-block-separator"/> <h2>Guedes promises a green, digital future for Brazil&nbsp;</h2> <p>In stark contrast to his fellow cabinet members and President Jair Bolsonaro himself, Economy Minister Paulo Guedes reassured global observers about Brazil’s commitment to the goals of the Paris Agreement, promising that the country’s future will be “digital and green.”</p> <ul><li>Mr. Guedes said Brazil “recognizes the importance of the environmental dimension” and that recent moves — such as the approval of a new legal framework for basic sanitation — will allow for eco-friendly investment. He also believes that joining the OECD would help the country to improve environmental and governance policies.</li></ul> <p><strong>How to pay for it?</strong> Economic behemoths such as the European Union see sovereign green bonds as the go-to tools to fund environmentally-friendly infrastructure investments during a post-pandemic recovery.&nbsp;</p> <ul><li>Questioned by <strong>The Brazilian Report</strong> on whether Brazil could do the same, Treasury Secretary Bruno Funchal said excessive budget constraints are preventing Brazil from moving forward on the matter. “Of course an ESG agenda [environmental, social, government] or green bonds are important, but we must consider that the government’s budget is very rigid.”</li></ul> <p><strong>What needs to change?</strong> The OECD believes that reforms are still the biggest issue for Brazil, as the country still needs to overcome challenges that are older than the pandemic, such as stagnated productivity levels, bureaucracy, and low levels of competitiveness.</p> <ul><li>Among the main recommendations, the report suggests reshaping social policies to boost cash-transfer program Bolsa Família and merge programs such as FGTS and unemployment aid. Other goals would be to simplify the overly complicated tax system and speed up legal procedures.</li></ul> <p><strong>The outlook for 2021.</strong> As has become customary, Mr. Guedes emphasized the reformist agenda praised by the OECD in its latest report on Brazil, and doubled down on privatization pledges. The cabinet minister blames the pandemic for the government&#8217;s failure to privatize a single federally-controlled company in two years. “In 2021, Brazil will be the biggest investment frontier in the world,” he added, without expanding on targets or timeframes.</p> <p><em>— with Natália Scalzaretto</em></p> <hr class="wp-block-separator"/> <h2>What else you need to know today</h2> <ul><li><strong>Budget 1.</strong> After a <a href="https://brazilian.report/newsletters/brazil-daily/2020/10/30/squabbles-over-2021-budget-could-throw-brazil-into-shutdown/">contentious sitting</a>, Brazilian lawmakers passed the Budgetary Directives Law (LDO) on Wednesday, which sets the government’s fiscal priorities for the following year. Still, Brazil will enter 2021 without approving its federal budget. But the LDO is a crucial first step in this process; failing to approve it before the start of 2021 would throw Brazil into uncharted waters and greatly increase the risk of a shutdown. Now, the government will be allowed to spend one-twelfth of the 2020 budget every month until approving a final 2021 budget.</li><li><strong>Budget 2.</strong> According to the LDO, the Economy Ministry&#8217;s fiscal targets for 2021 foresee a BRL 247.1 billion deficit by the end of next year.</li><li><strong>House race.</strong> The Workers&#8217; Party has decided not to support Congressman Arthur Lira in his bid for House Speaker. Mr. Lira is a leader of the &#8220;Big Center,&#8221; a group of rent-seeking conservative parties that has been close to President Bolsonaro as of late. &#8220;With the opposition, we will build an alternative in defense of democracy,&#8221; party chairperson Gleisi Hoffmann <a href="https://twitter.com/gleisi/status/1339397817849274368">said</a> on Twitter. The party leans towards backing another center-right candidate to be chosen by incumbent Speaker Rodrigo Maia. The Congress leadership <a href="https://brazilian.report/newsletters/brazil-weekly/2020/10/13/forget-mayors-house-speaker-election-race-counts/">elections</a> will take place on February 1, 2021.</li><li><strong>Vaccination.</strong> On Wednesday, U.S. pharmaceutical giant Pfizer submitted documentation to Brazilian regulators on the phase 3 trials of its coronavirus vaccine, developed in partnership with German biotechnology company BioNTech. Pfizer, however, states that it has not requested approval for emergency use. Instead, its move was part of the continuous process of providing data to prove the vaccine&#8217;s effectiveness and safety, which started early in November. Meanwhile, the Pfizer vaccine got the <a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/12/16/chile-first-in-south-america-to-approve-pfizer-covid-19-vaccine/">green light from Chilean regulators</a>.</li><li><strong>Air travel.</strong> Despite a second coronavirus wave, Azul Airlines — Brazil&#8217;s third-biggest carrier — expects to operate over 90 percent of its domestic capacity in December. For Q1 2021, &#8220;Azul expects to operate more than 100 percent of its domestic capacity and more than 85 percent of its total capacity compared to Q1 2019,&#8221; the company said in a <a href="https://api.mziq.com/mzfilemanager/v2/d/ed78542a-4e01-429a-8926-03d69ccfa307/89dcb3be-1801-33cf-f3a3-7880c5909269?origin=1">securities filing</a>. Between October and November, Azul&#8217;s domestic load factor jumped from 79 to 83 percent — even higher than in November 2019.</li><li><strong>Rio de Janeiro.</strong> The Rio de Janeiro Municipal Accounts Court has rejected the 2019 accounts of Mayor Marcelo Crivella&#8217;s administration. The 5-1 vote by board members led to an unprecedented decision by a normally lax court — a testament to how politically weak Mr. Crivella has become. Under his leadership, Rio has continued its descent into economic collapse — and citizens punished him in November by denying him re-election.

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