Brazil to bail out states and municipalities

. May 04, 2020
covid-19 bailout to states Senators Weverton (left) and Davi Alcolumbre. Photo: Edilson Rodrigues/Ag. Senado

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This week, we cover the plan to give aid to states and cities to cushion the Covid-19 blow. How the use of bots skews online political debate in Brazil. The rising Covid-19 death toll in South America.  

The economic relief plan for state administrations, explained

In a 79-1 vote, the Senate approved a BRL 125-billion plan of financial aid for state and municipal governments,

aimed at cushioning the economic effects of the coronavirus crisis. The proposal now heads to the lower house, which is expected to hold a vote today. If approved swiftly, the first installment could be paid out on May 15.</p> <p><strong>Why it matters.</strong> State administrations have been <a href="https://brazilian.report/business/2019/09/05/state-finances-biggest-risk-brazilian-economy/">on the brink of financial collapse</a> for years — a process that is only being accelerated by Covid-19.</p> <p><strong>Money, money.</strong> The plan encompasses direct money transfers, but also the renegotiation of debts:</p> <ul><li>Direct money for free use: BRL 30 billion for states, BRL 20 billion for cities;</li><li>Healthcare and social services: BRL 7 billion for states, BRL 3 billion for cities;</li><li>Suspension and renegotiation of debts with federal banks: BRL 49 billion (varying according to each case);</li><li>Loan renegotiation with international bodies: BRL 10.6 billion;</li><li>Suspension of cities&#8217; social security debts: BRL 5.6 billion.</li></ul> <p><strong>Split.</strong> The BRL 7 billion destined to healthcare and social services will be split between states according to their population and Covid-19 infection rate per 1 million people, to be measured on the 5th day of each month. The latter has been the subject of controversy, as it benefits states with low populations — to the detriment of states with much more cases, such as São Paulo or Rio de Janeiro.</p> <ul><li>Senate President Davi Alcolumbre, who negotiated the plan with the government, was accused of inserting this mechanism to favor his home state of Amapá.</li></ul> <p><strong>You scratch my back … </strong>In exchange for the aid package, cities and states must freeze civil servants&#8217; salaries until at least December 31, 2021. The only exceptions will be healthcare workers and members of the Armed Forces working directly in the fight against Covid-19.</p> <hr class="wp-block-separator"/> <h2>How bots skew public debate online</h2> <p>Opinion polls show that President Jair Bolsonaro is losing support among middle-class and higher-income populations, which were his strongholds in the 2018 election. Another recently released survey showed that 58 percent of voters don&#8217;t trust the government. However, if you were observing Brazil&#8217;s political landscape on Twitter, these trends would be invisible. By using social media bots —&nbsp;automated, inauthentic accounts — supporters of the president have tried to create an image of mass support for Jair Bolsonaro.</p> <p><strong>Why it matters.</strong> According to <a href="https://reutersinstitute.politics.ox.ac.uk/sites/default/files/inline-files/DNR_2019_FINAL.pdf">Reuters&#8217; Digital News Report</a>, social media has become Brazilians&#8217; leading source for news. And a <a href="https://arxiv.org/pdf/1810.12398.pdf">2018 study</a> by the Massachusetts Institute of Technology revealed that the use of bots can have a &#8220;disproportionate impact on [voters&#8217;] opinions, and this impact is primarily due to their elevated activity levels.&#8221;</p> <p><strong>Interview. </strong>Reporter Natália Scalzaretto reached out to Christopher Bouzy, founder of the platform Bot Sentinel, which monitors the use of inauthentic accounts. This interview has been edited for length and clarity.</p> <p><strong>What has changed in the use of social media bots in Brazil since last week?</strong></p> <blockquote class="wp-block-quote"><p>We are monitoring approximately 400 inauthentic accounts focused on Brazilian topics and observed an increase in activity since April 24 <em>[when former Justice Minister Sergio Moro resigned]</em>. Note that bots can be human-controlled accounts pretending to be something they are not. These are toxic trolls that knowingly spread misinformation and disinformation.</p></blockquote> <p><strong>Brazil’s main trending topic on April 27 gathered 15,000 mentions and contained quite a clear typo (#FechadoComBolsolnaro). Was this promoted by bots? There was a suggestion the spelling mistake was a way to manipulate the Twitter algorithm and escape anti-misinformation controls.</strong></p> <blockquote class="wp-block-quote"><p>Yes, it is possible that a network of inauthentic accounts helped amplify the misspelled hashtag, and no, it probably wasn’t done on purpose. Instead, the account that tweeted it first didn’t recognize the error, and the other inauthentic accounts just retweeted or copy and pasted the same misspelled hashtag.</p></blockquote> <p><strong>How successful are bots in expanding the size and scope of attention a hashtag receives?</strong></p> <blockquote class="wp-block-quote"><p>It is not difficult for inauthentic accounts to amplify hashtags and topics. They use their network of fake accounts to get the trend started, and then their real followers help amplify the hashtags and topics.</p></blockquote> <hr class="wp-block-separator"/> <h2>Markets</h2> <p>Some Q1 earnings reports are set to rattle markets this week, including Itaú Unibanco, Brazil&#8217;s largest private bank, and Banco do Brasil, the largest state-controlled bank. They are set to draw attention after fellow bank Bradesco posted a 40-percent drop in profits last week. Another highly anticipated report comes from Gol — the country&#8217;s leading airline — which will give investors a clue on how Covid-19 has affected the aviation industry, even if the true hit will only come in Q2.</p> <hr class="wp-block-separator"/> <h2>Covid-19 death toll in Latin America still climbing</h2> <p>The coronavirus spread has created <a href="https://www.aa.com.tr/en/americas/coronavirus-cases-rise-in-ecuador-peru-brazil/1820793">worrisome trends</a> in three South American countries: Brazil, Peru, and Ecuador. In the first two, a low compliance rate with quarantine rules in several cities — partially driven by a <a href="https://gestion.pe/peru/cuarentena-evito-que-peru-fuese-otra-espana-dice-vicedecano-colegio-medico-coronavirus-covid-19-noticia/">highly informal economy</a> that pushes people to continue working — has lowered the effectiveness of social isolation measures. Ecuador, on the other hand, has been a textbook example of a country heading toward collapse, despite authorities having taken Covid-19 seriously. The country&#8217;s biggest city of Guayaquil has seen gruesome scenes of bodies piling up on the streets, as <a href="https://brazilian.report/latin-america/2020/04/01/in-ecuador-covid-19-is-leaving-a-literal-trail-of-bodies/">reported by our own Lucas Berti</a>.</p> <div class="flourish-embed flourish-chart" data-src="visualisation/2233703" data-url="https://flo.uri.sh/visualisation/2233703/embed"><script src="https://public.flourish.studio/resources/embed.js"></script></div> <hr class="wp-block-separator"/> <h2>Looking ahead</h2> <ul><li><strong>Deadlock.</strong> Anti-democratic demonstrations in support of President Jair Bolsonaro have become a regular Sunday occurrence. This week, thousands of cars joined a motorcade in Brasília which demanded the removal of congressional leaders and attacked the Supreme Court. A newspaper crew was assaulted by some of the demonstrators. From outside of the presidential palace, Mr. Bolsonaro greeted supporters and sent not-so-veiled threats to other government branches: &#8220;We&#8217;ve reached our limit, there is no more negotiation, O.K.? [&#8230;] We will make the Constitution be respected at any cost. And that&#8217;s a two-way street,&#8221; he said, after saying that the Armed Forces are on his side. On Saturday, Mr. Bolsonaro had met with the heads of the Army, Navy, and Air Force.</li><li><strong>Quarantine.</strong> All social isolation indexes are down in Brazil. In the state of São Paulo, for instance, rates remained above 50 percent throughout the month of March, but dropped below half every weekday since April 8. The lowest rate was recorded on April 30, when only 46 percent adhered to the measures. As cases and deaths continue to rise, authorities are racking their brains to figure out how to enforce quarantine on a population that is increasingly fed up with staying at home. Starting today, the city of São Paulo will block major avenues during what would usually be rush hour.</li><li><strong>Federal Police.</strong> President Bolsonaro is expected to name a new Federal Police Chief today. His first pick for the job, Alexandre Ramagem — the current director of the Brazilian Intelligence Agency&nbsp;—&nbsp;was blocked by the Supreme Court for not complying with requirements of &#8220;impersonality and honesty&#8221; for all presidential nominations (Mr. Ramagem is a close friend of Carlos Bolsonaro, the president&#8217;s second-eldest son.) Mr. Bolsonaro&#8217;s willingness to name someone of his intimate trust to the job is at the center of former Operation Car Wash Judge <a href="https://brazilian.report/power/2020/04/24/sergio-moro-resigns-justice-minister-and-goes-out-swinging/">Sergio Moro&#8217;s resignation from the Justice Ministry</a>.</li><li><strong>Interest rates.</strong> On Wednesday, Brazil&#8217;s Central Bank will decide on the country&#8217;s benchmark interest rate for the next 45 days. The rate currently sits at a record-low 3.75 percent, but analysts expect further cuts.</li></ul> <hr class="wp-block-separator"/> <h2>In case you missed it</h2> <ul><li><strong>Investigation.</strong> Early last week, the Supreme Court authorized an investigation into ex-Justice Minister Sergio Moro&#8217;s accusations that President Jair Bolsonaro <a href="https://brazilian.report/newsletters/brazil-daily/2020/04/28/jair-bolsonaro-placed-under-formal-investigation/">tried to politically interfere with federal probes</a> by trying to change the Federal Police Chief. Despite the three-day Workers&#8217; Day weekend, Mr. Moro was deposed on Saturday — in testimony that lasted for over eight hours — and gave marshals a detailed account of what he described as a &#8220;systematic effort&#8221; to try and get confidential information on investigations against members of his family.</li><li><strong>Justice.</strong> After losing the most popular member of his cabinet, Jair Bolsonaro pulled a smart move by naming former Solicitor General <a href="https://brazilian.report/power/2020/04/30/analyzing-jair-bolsonaro-pick-justice-minister/">André Luiz Mendonça</a> to the Justice Ministry. He is a respected legal scholar with experience in the public sector,&nbsp;and he has good relationships with several Supreme Court justices.&nbsp;</li><li><strong>Bickering.</strong> Despite several problems in getting its BRL 600 three-month emergency salary to millions of low-income citizens, members of the government&#8217;s economic team have been <a href="https://brazilian.report/newsletters/brazil-daily/2020/04/30/brazil-bolsonaro-economic-team-falls-out-over-infrastructure-plan/">more worried about in-fighting</a>. Economy Minister Paulo Guedes has publicly bashed a plan to boost growth through massive infrastructure investments, saying it is as if the government&#8217;s wallet is being &#8220;pickpocketed.&#8221; Meanwhile, projections for Brazil&#8217;s 2020 GDP continue to worsen — the Economist Intelligence Unit predicts a reduction of 11 percent.</li><li><strong>Covid-19.</strong> The number of coronavirus infections in Brazil surpassed 100,000 on Sunday, reaching a total of 101,147 cases and 7,025 deaths. Still, the real figures are likely to be much higher —&nbsp;as Health Minister Nelson Teich himself admitted that the country is &#8220;<a href="https://brazilian.report/coronavirus-brazil-live-blog/2020/04/29/health-minister-says-brazil-is-flying-blind-during-pandemic/">flying blind</a>,&#8221; not knowing the actual percentage of people infected.

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