Link to article: https://www.bbc.com/news/world-latin-america-54476934
Since April, the government of Brazil has given cash handouts to those living in poverty to help alleviate the impact of Covid-19. Anyone living on less than half of the minimum wage is considered to be in poverty, and about 44% of Brazil’s households have received the monthly payments.
President Jair Bolsonaro, whose popularity increased because of the handouts, has recently approached disagreements with Congress over the continuation of these payments. They are scheduled to end in December because of the country’s budget and spending cap, which is expected to send 15 million people back into poverty.
Brazil has been one of the world’s hardest-hit countries by Covid-19, but recently, as the pandemic has shown signs of easing, shops and businesses have reopened. However, the end of the government handouts in December are expected to trigger a recession in Brazil’s economy, therefore causing a sharp rise in unemployment.
The cash handouts have caused Brazil’s poverty and economic inequality levels to reach an all-time low. However, as beneficial as it is, the approach is unsustainable. Many economists now about Brazilian markets after Bolsonaro suggested to exceed constitutional spending caps to continue the distribution of cash.
Both President Bolsonaro and Congress are in a sticky situation, unsure about which steps to take next. Do they continue with the handouts and risk damaging the economy, or terminate it and cause the huge number of people living in poverty to suffer greatly?
A lasting impact that the payments will have is the increased discussion about government welfare during political debate. Brazilian citizens have now gotten used to this ambitious of a government program, and will demand more-or-less the same type of thing in the future. This will directly affect the presidential election next November.
Bolsonaro’s zealous decision to distribute cash handouts back in April may have gained him popularity and success as a semi-new president; however, citizens’ expectations for him to continue this program will most likely cause irremediable tension between the government and Brazilian people in the very near future.
Brazil isn’t the only state dealing with the effects of the virus and how to decrease emergency government spending without completely destroying the economy’s recent growth. Similar to Brazil, the U.S. had issued generous unemployment payments to its citizens. However, the program ended in July and government officials are still debating whether they should continue. Economists warn that continuous payments will disrupt the country’s budget too much, which is the debate that Bolsonaro is currently dealing with as well.