Government is considering extending emergency aid until September at an extra cost of R$ 18 billion – 06/07/2021 – Market

The government is designing a new extension of emergency aid. The plan is to extend the benefit for another two months, expected to end in September this year.

With the larger number of installments, the government will have more time to finalize the proposal for a social program that will replace Bolsa Família. The details are being worked out between president Jair Bolsonaro and ministers Paulo Guedes (Economy) and João Roma (Citizenship).

The idea of ​​extending the payment of emergency aid had been treated by the economic team as a possibility, depending on the evolution of the pandemic. Now, members of the Ministry of Economy have told leaf that the extension is taken for granted.

In the format elaborated by the folder, the two additional months of the aid must have a total cost of R$ 18 billion. Of this amount, R$ 11 billion would be released through extraordinary credits, resources destined to unforeseen and urgent situations. This amount is not accounted for in the spending ceiling, a rule that limits government spending to the variation in inflation.

Another R$ 7 billion will come from leftovers from the current round of assistance. The program in effect today has a four-month duration, from April to July, and received R$ 44 billion.

To implement the proposal, the government must issue a Provisional Measure to extend the aid to August and September. The idea is to keep the public benefited and the values ​​of the installments. Today, the benefit varies according to the family composition, with installments ranging from R$ 150 to R$ 375 per month.

To support the decision to expand the emergency program, government officials say they are being consistent with recent speeches by governors, who promised to speed up the vaccination program by September. Therefore, they claim that it would be important to maintain coverage of the aid during this period.

The argument represents a change of position in relation to speeches made recently by minister Paulo Guedes. In May, he stated on more than one occasion that any extension of the aid would depend on the unfolding of the health crisis.

“Emergency aid is a weapon that we have and that can, yes, be renewed. If the disease continues to strike, the deaths continue, we will have to renew”, he said two weeks ago.

Members of the ministry have also put pressure on the government in recent months for the reformulation of Bolsa Família to be presented soon, in order to avoid a renewal of the aid.

When contacted, the Ministry of Economy said that it does not comment on measures under study.

In the case of Bolsa Família, the average benefit is in the range of R$190 per month. Bolsonaro has already stated that, in the new social program, this amount should rise to R$250 or more. Some allies say there is pressure to transfer an average of R$300 per family.

Congressmen close to Bolsonaro say he counts on expanding social coverage to reduce the rejection pointed out by the voting intention polls.

In the design being discussed by the government, the new social program must incorporate a mechanism defended by the economic team. The idea is that, if a beneficiary finds a formal job, he will continue to receive, for a specified period, part of the social assistance.

Thus, government officials hope that the families assisted by the program can be encouraged to enter the labor market, as they would receive more than the social benefit for a few months.

One of the government’s arguments is that, in Bolsa Família, the beneficiary leaves the program when he gets a formal job and then, if he loses his employment contract, he has difficulty receiving the income transfer again.

On Monday (7), the president of the Chamber, Arthur Lira (PP-AL), defended that, instead of extending emergency aid this year, the government should present a proposal for a new social program that should reformulate the Bolsa Família .

“The aid must be between July and August. I don’t think the best solution is to postpone it. We have to have a viable project for even before the break [do Congresso, em meados de julho] vote for a permanent income project to replace Bolsa Família”, said Lira at the opening of the 12th edition of Bradesco BBI London Conference.

Despite the government signaling a decision contrary to what Lira said, Bolsonaro’s interlocutors in Congress deny that the episode will generate a strain on the president of the Chamber.

In addition to maintaining the aid while it awaits the expansion of the vaccination program, the government argues that more time is needed for the proposal for a new Bolsa Família to be presented and approved by Congress.

Members of the economic team say that the last three months of the year will be crucial for defining the government’s path in the social area. The new Bolsa Família will have to be approved and implemented in 2021. Otherwise, as the Electoral Law prohibits the creation of new social spending in an election year, the government would be prevented from tampering with the program.

Government officials also reject the idea of ​​rifts between Minister Paulo Guedes and Lira. They mention, for example, that the two together formulated the tax reform slicing, in the model desired by the economic team.

Emergency aid was created in 2020 to serve vulnerable people during the coronavirus pandemic. Last year, the government spent nearly R$300 billion on the aid. The value of the installments started at R$600 and then dropped to R$300.

In December, the program ended without a proposal for renewal by the government. The assessment at that time was that the pandemic was subsiding and it would no longer be necessary to pay for assistance.

After recognizing the worsening of the health crisis, the government began negotiating the approval of a PEC (Proposed Amendment to the Constitution) which, in addition to unlocking aid, created a series of fiscal adjustment measures.

The proposal was enacted only in March, with the release of benefits in April. As a result, the country spent the first quarter without emergency assistance.

Now, members of the Ministry of Economy affirm that it will not be necessary to approve a new PEC or decree public calamity to renew the aid. According to sources in the folder, the assessment is that the provisional measure will be sufficient to implement the plan.

Emergency assistance in 2021

  • Four months, from April to July
  • Portion depends on family composition. Standard value is R$250. For female heads of household, the value is R$375. People who live alone receive R$150
  • Audience was initially estimated at 45.6 million families
  • Total amount released of R$ 44 billion

​Extension under study

  • Two more installments, in August and September
  • The idea is to wait for the expansion of the vaccination program in the states
  • Audience served and value of installments would be maintained
  • The cost of the two installments should be R$ 18 billion (R$ 11 billion in new extraordinary credits and R$ 7 billion in leftovers from the current round)

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