The ‘coronavoucher’ has pushed Brazil’s poverty to record lows
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Brasília/New York — Brazil, which has suffered one of the world’s worst pandemic tolls, has responded to the crisis by distributing so much cash directly to citizens that poverty and inequality are approaching national historic lows.
Some 66-million people, 30% of the population, have been getting 600 reais ($110) a month, making it the most ambitious social programme ever undertaken in Brazil, a shocking shift under President Jair Bolsonaro, who has railed against welfare, dismissed the virus — and now finds himself newly popular.
The government hasn’t published its own figures yet but data from the Getulio Vargas Foundation, one of Brazil’s top universities, show that those living on less than $1.90 a day fell to 3.3% in June from 8% last year, and those below the poverty line were at 21.7% compared with 25.6%. Both represent 16-year lows.
Economist Daniel Duque, the main investigator, said poverty has, in fact, hit its lowest rate since data collection began 40 years ago but a shift in definitions in 2004 makes direct comparison before then slightly complicated. He added that unpublished measurements from July and August show that inequality calculated by the Gini coefficient fell below 0.5 for the first time ever.
In other words, as Covid-19 has killed some 122,000 Brazilians, it has paradoxically driven down poverty and inequality, at least in the short term, and also placed government welfare at the heart of political debate, like a decade ago with the bolsa familia programme that lifted millions. The issue will reverberate in November’s local elections, a dry run for the presidency in 2022.
Duque says it’s as if Brazil had suddenly created a massive basic-income programme. He believes it won’t be possible to end it soon: “The population will surely demand more types of programmes like this, and we can’t run the risk of a huge drop-off.”
In fact, the government has begun paring it back. On Tuesday, Bolsonaro announced that handouts would be halved for the remainder of the year. And while he promised to make some form of stipend permanent he hasn’t indicated how he will pay for it.
Economists say the approach is unsustainable. Brazil is headed to its largest primary deficit ever of more than 11% of GDP this year, and “the challenge is how do you unwind from this” says Christopher Garman, MD for the Americas at Eurasia Group. “There is no free lunch.”
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Some 66-million people, 30% of the population, have been getting 600 reais ($110) a month, making it the most ambitious social programme ever undertaken in Brazil, a shocking shift under President Jair Bolsonaro, who has railed against welfare, dismissed the virus — and now finds himself newly popular.
The government hasn’t published its own figures yet but data from the Getulio Vargas Foundation, one of Brazil’s top universities, show that those living on less than $1.90 a day fell to 3.3% in June from 8% last year, and those below the poverty line were at 21.7% compared with 25.6%. Both represent 16-year lows.
Economist Daniel Duque, the main investigator, said poverty has, in fact, hit its lowest rate since data collection began 40 years ago but a shift in definitions in 2004 makes direct comparison before then slightly complicated. He added that unpublished measurements from July and August show that inequality calculated by the Gini coefficient fell below 0.5 for the first time ever.
In other words, as Covid-19 has killed some 122,000 Brazilians, it has paradoxically driven down poverty and inequality, at least in the short term, and also placed government welfare at the heart of political debate, like a decade ago with the bolsa familia programme that lifted millions. The issue will reverberate in November’s local elections, a dry run for the presidency in 2022.
Duque says it’s as if Brazil had suddenly created a massive basic-income programme. He believes it won’t be possible to end it soon: “The population will surely demand more types of programmes like this, and we can’t run the risk of a huge drop-off.”
In fact, the government has begun paring it back. On Tuesday, Bolsonaro announced that handouts would be halved for the remainder of the year. And while he promised to make some form of stipend permanent he hasn’t indicated how he will pay for it.
Economists say the approach is unsustainable. Brazil is headed to its largest primary deficit ever of more than 11% of GDP this year, and “the challenge is how do you unwind from this” says Christopher Garman, MD for the Americas at Eurasia Group. “There is no free lunch.”
Markets ...