April 08, 20 - 4:21 pm - LABS

Against coronavirus, the Brazilian government will allow workers to withdraw BRL 1,045 from FGTS fund

The Brazilian government will allow the withdrawal of BRL 1,045 ($200) from the FGTS (the Portuguese acronym for “Guarantee Fund for Length of Service,” an obligatory social insurance fund which saves 8% of the worker’s earnings monthly to support them in case of specific eventualities, such as long-term sickness or the purchase of a new home).

The decision was published in the Provisional Measure, released on Tuesday night, and should help alleviate the impact of the Covid-19 crisis on the pocket of Brazilians.

The withdrawal schedule is due to begin on June 15th and will run until December 31st. According to the calculations of the government’s economic team, the measure could inject BRL 36 billion (almost $7 billion) into the Brazilian economy. Families are expected to use the money to pay debts and boost income amid the coronavirus pandemic.

The decision has immediate effect but needs to be approved by Congress to continue to be effective. With the Covid-19 crisis, Congress should analyze the measure in less time than usual. With a new rite approved last week, provisional measures must now be voted within 16 days.

Also on Tuesday, the government published the decree that regulates the operation of the emergency aid program of BRL 600. The program, which should cost BRL 98.2 billion to the government, has the potential to reach 54 million informal workers, self-employed and unemployed in the country for the next two months.