Government misses projection of resumption and leaves informal without emergency aid – 02/20/2021 – Market

The error in the federal government’s projections regarding the evolution of the pandemic and the recovery of the economy in early 2021 left most informal workers without a supportive public policy, which has already resulted in increased poverty and a fall in income and consumption of families.

The reversal of this situation, although partial, now depends on the approval of a new round of payment of emergency aid, even if in smaller amounts and for a more restricted number of people. Something that will not happen before March, leaving a hole of at least two months in the families’ income.

When preparing the Budget proposal for 2021, the Ministry of Economy assessed that the recovery of activity and the drop in the number of cases seen in the second half of last year were a trend that would be maintained at the beginning of the year. Therefore, it did not envisage new stimulus measures in the proposal sent to Congress.

Even with the reversal of this favorable scenario, as of December, it maintained the assertions that there would be no need for the benefit to boost the economy, as employment was already returning, something that was not confirmed. Only after pressure from Congress did it begin discussions to recreate the program.

In 2020, the aid represented an expense of R $ 293 billion. The expectation is a renewal with spending of up to R $ 50 billion in 2021.

A work conducted by Unifesp (Federal University of São Paulo) in partnership with the Federal Public Ministry in the state already shows some of the effects of the absence of public policies both in relation to families as well as small businessmen in the peripheries of the Metropolitan Region of São Paulo.

“We are seeing hunger coming back. You enter 2021 with an increase in the price of a series of goods that the most needy population needs to survive, with a drop in the income of families that stopped receiving aid, many failed to return to the labor market. It is a panorama of reduced consumption, even of basic items. This is what we have seen in the interviews ”, says Luciana Rosa de Souza, coordinator of the Graduate Program in Economics and Development at the university.

According to the professor, merchants from the poorest neighborhoods, who saw their businesses prosper while the aid was in force, also began to report a drop in sales. “We talked to people who own retail stores, grocery stores, butchers. The interviews have shown that people are focusing on rice and beans, on what is essential. ”

Marcelo Seráfico, professor at the Department of Social Sciences at UFAM (Federal University of Amazonas), says that the projections that the pandemic would cool down and allow a resumption of activities were made by economists whose competence for epidemiological analysis is almost nil at the expense of information released by health professionals and entities, who now point to the risk of a third wave of rising infections and deaths in the country.

Serfico states that the absence of aid is especially felt in a city like Manaus, which has unemployment indicators of around 19%, indicators of self-employed workers above 50%, and an epidemiological situation of the most serious in the country.

He considers that an extension of the benefit on a more restricted basis, in terms of values ​​and population served, is not enough to contain the increase in poverty, in addition to forcing many people to leave home in search of jobs in a scenario in which removal should be encouraged.

“This type of policy seems to me to be necessary even outside the conditions of the pandemic. Now, the definition of criteria for the distribution of the resource should not be narrowed down ”, he says.

“There are two problems to be tackled, an economic problem related to consumption and another one related to contamination, preventing people from being exposed. In a situation of poverty and misery as great as the country in general, and Amazonas, in a very particular way, an extension is necessary. ”

Ecio Costa, professor of Economics at UFPE (Federal University of Pernambuco), says that the return of the benefit is necessary, but says that the payment of residual installments of the aid in January and the saving of part of these resources can help to mitigate the drop in income in this two-month period. With that, the return of the program in March would come at exactly the right time.

“It still has some spillover effects from the impact of aid on the economy in these months of January and February,” he says.

According to Costa, it would only be possible to give up renewal if there were greater advances in the vaccination campaign than in contamination and deaths, something that has not been confirmed so far.

This extension, however, can be done for a smaller group of people, those most affected by the drop in income. With this, he says, the tax impacts of the benefit would be minimized, without this expense resulting in more inflation, interest rates and other side effects that would also affect the population’s income.

“If the emergency aid came with the purpose of providing assistance to the population during the period when we were suffering the impacts of the restrictions with Covid, this policy should be continued. But now you can give a bigger focus, reducing the number of people that will receive, being really directed to those in which you have a direct economic impact. This reorganization could already have been done, rethought and put into practice. ”

Rodrigo da Rocha Gonçalves, professor of economics at Furg (Federal University of Rio Grande), says that the government can implement measures to compensate, even partially, the expenses with the new aid, in order to reduce side effects of the increase in the deficit public.

“We have some alternatives. Reassess payroll, subsidies and spending productivity. The fiscal space is tight, but it is up to the economic team to find these alternatives ”, he says.

According to Gonçalves, the data from 2020 showed that the aid was one of the factors that halved the contraction of the economy last year, estimated at about 4% by most economists, in addition to having returned to the public coffers through the collection of taxes at all levels of government. For this reason, it proved to be a successful policy in economic and social terms.

“We have the fiscal aspect, but the question that needs to be evaluated is cost-benefit between having it implemented or not. This generated income, heated up the economy, mainly trade, because the portion served is that which consumes almost all of the income, and had an effect on the well-being of these people. Now, we will have January, February and maybe March without this assistance. The impact will be strong, mainly with the reduction of household consumption. ”



“I see some people saying that emergency aid has reduced and demand will fall, it is not my understanding”
Adolfo Sachsida (secretary of Economic Policy at the Ministry of Economy)


“We make it very clear to everyone. If there is a second wave in Brazil, we already have the mechanisms. We digitize 64 million Brazilians. We know who they are, where they are and what they need to survive”
Paulo Guedes (Minister of Economy)


“Several states have already achieved or are close to achieving herd immunity (…) I think the probability of a second wave is very low. Not only that. I think that the data we have shows something concrete, which is the strength of the economic recovery”
Adolfo Sachsida (secretary of Economic Policy at the Ministry of Economy)


“The disease receded and the Brazilian economy returned. Is it a fact that there is a return, a second wave, etc.? For now, some regions seem to be accusing this, but it is not a general phenomenon ”
Paulo Guedes (Minister of Economy)


“We are living through a pandemic end”
Jair Bolsonaro, President of the Republic


“I think there will be. There will be an extension. (…) If you do not do it responsibly, you end up having distrust in the market and increase the value of the dollar, which increases to R $ 6. And it will impact the price of fuel. It’s a snowball ”
Jair Bolsonaro, President of the Republic


The article from the source


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