Auxilio Brasil: One step forward, two steps back

On October 20th, ‘Auxilio Brasil’ (Aid Brazil), Brazil’s new social welfare programme, was announced by its government. Set to replace the current Bolsa Familia programme in November, the initiative aims to help families living in extreme poverty, and those with pregnant women and young children, by guaranteeing a minimum of 400 Reais (approximately $72 US) per month to each family. Underpinning the push for this social welfare programme is the government’s growing concern that the poor have faced the brunt of the COVID-19 pandemic. 

While the country has an extensive history with social welfare programmes, such as the Benefício de Prestação Continuada (BPC) and Sistema Único de Assistência Social (SUAS), there are certain reservations regarding Auxilio Brasil. First, the programme seeks to replace Bolsa Familia, an initiative which has achieved commendable success since its establishment by former President Lula in 2003. Utilising only 0.5 per cent of the country’s GDP, Bolsa Familia provided low-income families with small cash transfers conditional on their children being fully vaccinated and attending school. Through this, the government aimed at addressing the problem of the vicious cycle of transgenerational poverty within the country. However, during the pandemic, this well-functioning system faced acute challenges in service delivery. Nearly one million families experienced reductions in their benefits; some were removed from the programme due  to administration mismanagement, while many in need were left on the waitlist. Since this well-oiled system cracked under the pressure of the pandemic, questions arise as to whether this new transfer programme will be able to deliver, especially as the country faces the challenges of high unemployment rates, increasing poverty, and economic inequality exacerbated by the pandemic.

Complicating the introduction of the Auxilio Brazil further are the government’s plans to set the direct transfer into motion amidst the economic challenge of rising inflation. As of September, inflation rates are at an all-time high of 10.25 per cent, with consumer prices rising by 1.16 per cent. Gas, electricity and household articles witnessed the most significant hike in price. Under such conditions, many are skeptical that four hundred Reais will not be enough to ensure that the household necessities are met.

Skepticism also arises from the resignation of senior treasury officials soon after the announcement of this new programme. With Brazil’s long standing cap on government expenditure, there are concerns regarding the ability to actually monetise this scheme. If the government exceeds the set cap, there is a risk of ballooning the budget deficit. However, if it adheres to the same, there is a concern that it may redirect funds reserved for other public spending such as public sector salaries, pensions, etc. towards the new social welfare programme.

Doubt regarding the government’s objective arises when one looks at the timing of the announcement of this new programme. Jair Bolsonaro, the current President of Brazil, has recently been under siege over the country’s mismanagement of the pandemic. The parliamentary commission of inquiry (CPI) found him and his supporters guilty of insincere efforts to contain the spread of COVID-19. The report stated that the number of infections in Brazil could have been forty per cent less and saved a hundred and twenty thousand lives if the government had acted responsibly in line with time constraints. As the sessions were broadcasted live on national networks with millions of Brazilians tuning in, Bolsonaro’s popularity witnessed a considerable dip, with approval rates reaching a new low of twenty-two per cent. Looking towards national  elections in the next year, these low numbers appear to indicate a possible end to the  Bolsonaro era. This begs the questions: is the social welfare program an actual effort to help the vulnerable, or is it a way to gain support and restore his popularity? Is this all an election gimmick? 

Provision of assistance to those in dire need is critical, especially given the aftermath of the pandemic. However, without genuine and concentrated efforts, the programme will remain nothing more than a hollow promise.