Millions in Brazil thrown back into poverty as pandemic aid dries up

Getulio Vargas Foundation estimates that 12.8% of Brazil's population are now living below the poverty line of BRL 246 a month

Video Screenshot by Reuters

Tatiana Araujo de Sirqueira, a 33-year old single mother of six, and Brazilian President Jair Bolsonaro are almost neighbors. But they inhabit different universes.

Sirqueira lives by a landfill less than a mile from the Planalto presidential palace in Brasilia, along with 36 other families, and scrapes together cash by recycling trash.

READ ALSO: Coronavirus crisis in Latin America is worsened by poverty and inequality, says ECLAC

She is one of Brazil’s 40 million or so “invisibles,” a term coined by Economy Minister Paulo Guedes for those without formal employment who had flown largely under the radar of Brazil’s government – and society.

“I live beside the President. I see him and his security pass by here every day,” she said on a hot, dusty afternoon outside her improvised shack. “How can he pass here every day and not see the families here?”

READ ALSO: Brazil’s economy shrank last year by 4.1% amid the pandemic, less than forecast

Last year, however, Sirqueira was not invisible. From April to December, she and some 66 million other Brazilians received the government’s most generous cash transfer program ever, emergency aid to help the most vulnerable through the pandemic.

That nearly $60 billion burst of basic income softened the economic blow of the coronavirus, boosted Bolsonaro’s popularity and beat back poverty — but its expiration at the end of 2020 is unraveling many of those effects.

READ ALSO: Argentine President says Government will not rush debt deal with IMF

Sirqueira now relies on the pre-existing ‘Bolsa Familia’ social benefit of up to 205 reais ($36) a month, about a third of last year’s emergency aid, missing out on a smaller second round of the cash transfer program that starts in April.

“They said I no longer met the criteria and so I can no longer be part of the program. My life has gotten much more difficult since, with six children to raise,” she said.

Millions of Brazilians like her were briefly lifted out of poverty only to be tossed back again. The national poverty rate dropped suddenly to 4.5% in August from almost 11% at the start of 2020, calculates the Getulio Vargas Foundation.

However, the Rio de Janeiro-based think tank estimates that 12.8% of Brazil’s population — some 27 million people — are now living below the poverty line of BRL 246 a month, the most since the series began a decade ago.

Source: Microdados PNAD Contínua and PNAD Covid/IBGE, graph by Reuters.

The economic impact of the aid was matched by its political punch, reversing Bolsonaro’s dwindling popularity as the first wave of COVID-19 hit and winning him record approval among the country’s poorer classes and regions, which has since retreated.

Pollster Datafolha showed disapproval of Bolsonaro in Brazil’s poorer northeast outpaced his approval by 16 percentage points in April 2020, when the cash transfers began.

That gap shrank to just two points in August, the last month before the maximum 600 reais stipend was halved. By January the gap had rebounded to 15 points, essentially back to where it began.

With an eye on next year’s presidential election, Bolsonaro has been so keen to extend the program, even if it wreaks havoc on the public finances, roils financial markets and irks Guedes.

New aid to begin in April

The new aid package, starting in April, will provide four monthly transfers of an average 250 reais to a narrower set of informal workers. According to President Bolsonaro, payments are expected to start on April 4 or 5.

Its BRL 42 billion price tag is a fraction of the BRL 322 billion ($58 billion) bill for last year’s aid, which was almost 4.5% of gross domestic product.

The more modest program has eased some concern over the trajectory of Brazil’s public debt, but also narrowed impact on poverty and inequality rates.

Joao Saboia, professor emeritus at the Federal University of Rio de Janeiro, says even with the next round of cash transfers, poverty rates will remain high.

“The prospects for 2021 are very poor – slow vaccination, a stagnant economy, rising unemployment and high poverty,” Saboia said.

For Sirqueira, the single mother of six, it may be worse.

Local authorities are pushing to relocate her family to a satellite city outside the capital. She has resisted their efforts, wary of how her kids will fare in a new neighborhood.

On Tuesday, they bulldozed her shack.

(Co-written by LABS)

Get the best insights about Latin America market in your inbox