When Brazil’s new ultra-reformist, ultra-liberal Economy Ministry took charge in January, many analysts correctly pointed out that much of the effects of its economic agenda would take time to reflect on the Brazilian population. Reforms to the pension, tax, and public service systems have to be made via constitutional amendments, which involve long and complicated legislative procedures. As an example, nine and a half months into the administration, the government’s number one priority—an overhaul of Brazil’s pensions—has yet to be sanctioned.
And even once these changes are made official, in-built transition periods mean they are unlikely to have any direct effects on the Brazilian economy any time soon. This was hardly the “shock therapy” economics that Minister Paulo Guedes’ fellow Chicago School alumni introduced to Chile in the 1970s and 1980s; the goal here is more to do with investor confidence—showing foreign players that Brazil’s economy will become more liberal in the medium- and long-term, as a bid to convince them to bring in their money now.
However, the meteoric spike in market optimism expected from these reforms has ended up as a little more than a mild hop, and Brazil’s economic recovery remains desperately sluggish. As a result, the government has issued a series of decrees this month to boost spirits in the short-term, and potentially apply a salve to President Jair Bolsonaro’s struggling approval ratings.
Bolsonaro and Bolsa Família
Fulfilling one of his campaign promises, Jair Bolsonaro has instated the payment of a “Christmas bonus” in 2019 for the famous...
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