The dollar soared 1.7% and is priced at the highest level of the year, at 5.65 reais, as a reaction of the financial market to the maneuver to support the 12 months of extra aid to 17 million families in extreme poverty. In turn, the Bovespa index fell 2.3%.
The Government announced that it intends to increase the Auxilio Brasil plan by 20%, which in November will replace Bolsa Familia, the successful Workers’ Party (PT) program implemented in 2003 that lifted 54 million people out of poverty.
The social plans have never been updated since 2016, after the fall of Dilma Rousseff and now Bolsonaro intends to give 100 reais more for 12 months as part of extra help due to the pandemic.
That is, it will be 400 reais ($ 71) per family of the plan Aid Brazil, that pretends to be a social leg of Bolsonaro to confront the former president and opposition leader Luiz Inacio Lula da Silva, world famous for having taken Brazil off the FAO hunger map.
Lula reacted and argued that the PT defends raising the Bolsa Familia to 600 reais ($ 110). “Bolsonaro has to face the hunger and misery of the people and give them much more because it is not his money, it is money of the people who are returning to the people. He can give them money but we are going to win the elections.” said the former president, favorite in the polls for the October 2022 elections to defeat the far-right.
Guedes’ statements about drilling the spending ceiling to extend social plans for 12 months was repudiated by the editorials of the main newspapers, which have supported him almost entirely in their economic policy since 2019, although they object to the figure of Bolsonaro.
The minister spoke of a “waiver” (license) to be able to anticipate the revision of the spending ceiling hours after Bolsonaro said in a public act that the constitutional rule that pigeonholes public accounts to control the deficit was going to be respected.
Ultraliberal of the Chicago school of economics, Guedes, a financier, has as a reference and example – he says it publicly – the dictatorship of Augusto Pinochet in Chile (1973-1990), for which he worked in the eighties.
The minister lost the internal pulse of the Government with social aid after his figure was weakened by the Pandora Papers scandal, when it was discovered that he has an offshore company in the tax haven of the British Virgin Islands of 9.5 million Dollars.
The company, according to Guedes, is declared to the Brazilian treasury and has not had any movements since in 2019 he took office as Bolsonaro’s super-minister of Economy.
The main columnist of the Globo Merval Pereira group, affirmed that The economic proposals to increase social assistance from both Lula and Bolsonaro may harm Brazil more in 2022.
In line with the Itaú bank, the Globo group editorially defends a third way of the liberal right as an alternative to Lula and Bolsonaro, taking into account the scenario drawn by the polls.
The bid for the ceiling of public spending comes amid an increase in explicit scenes of hungry families searching for food in garbage dumps and lining up to remove bones from refrigerators.
At least 110 million people, almost 50% of the population, have experienced food insecurity in Brazil in the last year, although there are 19 million people in direct hunger, according to official data gathered by the Brazilian Research Network on Food Sovereignty (Pessan).
And that’s how the São Paulo financial market also sees it.
In the daily report, the economics department of investment bank Renascença Dtvm lashed out at the fight by the government and the left-wing opposition to increase public spending.
“The fact that exponents of the opposition to the federal government defend higher values of the income support program, such as the one suggested by Lula, of 600 reais per month, should be considered as an additional risk factor for the market because it can promote plus the pressure of government politicians for higher values of the Aid Brazil “says the report sent to investors and specialized media.
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