Brazilian Government and Congress try to enable new emergency aid

Studies to cut expenses and make room for a BRL 250 aid for four months should be completed later this week

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  • The idea is that the new aid will start to be distributed in March;
  • For this to happen, an agenda with proposals to open fiscal space and reforms needs to be sent to Congress.

Brazil’s federal government is working with Congress representatives on a bill to make possible a new emergency aid, in a strategy adopted to accelerate the proposal’s future vote, a source close to the negotiations told Reuters. The idea is to launch the new financial aid targeting 30 million Brazilians (half of the number of people benefited in 2020) in March, but compensations are needed to create fiscal space.

“The technical teams of the Ministry of Economy and Congress are working together in this process,” a source told Reuters. “This can speed [things] up.”

READ ALSO: Brazil faces $7 billion hole in 2021 budget from emergency aid, inflation

The studies aiming to make room for a BRL 250 aid ( just over $45), which will be granted for four months, should be completed this week. But members of Congress are pressuring for higher support. In 2020, Brazil’s federal government initially proposed an emergency aid of BRL 200; the amount was increased by parliamentarians to BRL 600 afterward.

“This is a subject under examination,” said the source. “We have to be committed to health but also to fiscal responsibility. That is why it is important to vote on the so-called War Budget PEC (a Constitutional Amendment Proposal that allows expenses related to the coronavirus to be separated from the general budget of the federal government) and the Federative Pact (which proposes a new distribution of resources among federal government, states and municipalities),” completed the source.

READ ALSO: Millions of Brazilians will return to poverty if emergency aid is suspended, shows study

The day before, a government source informed Reuters that the federal government is expected to make the new emergency aid feasible within three weeks, provided that an agenda is forwarded by the National Congress that includes voting on proposals to open fiscal space and reforms.

READ ALSO: Brazil’s new exchange market regulation will expand the use of foreign currency

In 2020, the Brazilian government paid emergency aid to 64 million unemployed, individual micro-entrepreneurs, and self-employed workers, generating a cost of almost BRL 300 billion (around $55.7 billion) to the national government.

Translated by LABS

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