How Much Will a New Stimulus Plan Help Brazilians?
Brazilian President Jair Bolsonaro’s administration is planning to provide approximately 165 billion reais ($32 billion) of economic stimulus this year through a program known as the “Income and Opportunity Program.” The initiative includes early payment of pension checks, the expansion of payroll-deductible loans and a new microcredit program. The payment for pensioners is expected to be released in July, a few months before the October presidential election. Why is the Brazilian government launching this plan now, and what are its most significant components? Who will benefit from the program, and how will it affect small and medium-sized enterprises in the South American country? To what degree could it bolster support for Bolsonaro, who is currently trailing former President Luiz Inácio Lula da Silva in the polls?
Anya Prusa, senior director at Dentons Global Advisors-Albright Stonebridge Group: “Social spending traditionally ticks up in an election year in Brazil for a simple reason: it tends to boost incumbent popularity. Against a backdrop of accelerating fuel and food prices, President Jair Bolsonaro is undoubtedly eager for any advantage as October approaches. This latest stimulus package is just part of a bigger government push to reduce the strain of high inflation and low growth on Brazilians’ pocketbooks, from the government’s Auxílio Brasil welfare program to the recent effort to cut fuel taxes. There are some signs that these earlier stimulus measures have helped to boost the president’s approval ratings: recent polls show that Bolsonaro has chipped away at the gap between himself and his top challenger, former President Luiz Inácio Lula da Silva, since the start of this year. However, while the margin has narrowed…”Read More
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