Bolsonaro’s rejection rates drop, but Brazilians demand more emergency aid

The rejection rate of the Jair Bolsonaro administration fell by 5 percentage points in October — to 31 percent, the lowest level since May 2019 — according to a new XP/Ipespe poll. The share of the population that evaluates the administration as “good/great” remained at 39 percent. Still, this is the second-highest approval rating of the government since February 2019, one month into President Bolsonaro’s term. 

The improvement in the administration’s popularity levels came off the back of improved prospects in a series of indicators: 40 percent of voters perceive news concerning the government as “negative,” down from 63 percent in May. 

Also, less Brazilians believe corruption will increase over the coming months, dropping five percentage points to 40 percent. However, this came before Wednesday’s scandal involving Senator Chico Rodrigues, the government’s deputy whip in the Senate, who was found hiding money embezzled from Covid-19 efforts “between his buttocks”.

Another key reason behind the president’s lower rejection rates — the coronavirus emergency aid program — is broadly supported by the population. As of October, 42 percent of interviewees had received the stipend, while 45 percent considered it was a good decision to extend payments until the end of the year. More importantly, 68 percent of Brazilians believe that if the new cash transfer program Renda Cidadã is not approved, the government should extend the emergency aid into 2021.

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Brazil Daily

Bolsonaro’s popularity boost tied to temporary benefit

Today, Bolsonaro faces a dilemma following new polls. Brazil to lift restrictions on foreign nationals. And a new chapter of Rio’s political debacle.

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Bolsonaro’s approval reaches new heights

A new poll by renowned pollster Ibope shows that[restricted] 40 percent of Brazilians believe Jair Bolsonaro is doing a ‘good or great’ job as president. This was the first nationwide poll carried out in Brazil through in-person interviews since the pandemic started — which makes it more comparable to surveys from before March 2020. 

Why it matters. A boost in his approval ratings certainly gives the president more political muscle — and the timing is great for him. Mr. Bolsonaro is facing a potentially embarrassing situation: the Supreme Court will decide whether or not he will be allowed to testify in writing in an investigation into his alleged illegal interference with the Federal Police. 

Emergency aid. Once again, polls show how the BRL 600 emergency aid program has boosted the president’s popularity. His approval skyrocketed among poorer and less-educated voters — while stagnating among college-educated people and those who earn at least BRL 5,000 a month (USD 907).

  • Remember that adage by Bill Clinton’s advisor James Carville, “it’s the economy, stupid”? In a country as unequal as Brazil, providing millions of poor people with purchasing power to cater to their basic needs works wonders for presidents. It helped Lula, and it is now helping Mr. Bolsonaro.

Yes, but … Interviews were made before the benefit was halved to BRL 300. For the country’s poorest 10 percent, the cut could lead to an immediate 44-percent loss in purchasing power

  • The progression of Mr. Bolsonaro’s approval ratings will be worth monitoring until the end of the year, when the emergency benefit is set to end outright. And it puts pressure on the administration to create a new cash-transfer program to prevent tens of millions from falling below the poverty line in 2021.
  • But the budgetary constraints that forced the government to slash the emergency aid will persist. The Economy Ministry foresees a BRL 861-billion deficit for this year — about 12 percent of the GDP.

Approval? A total of 51 percent of voters say they don’t trust the president, further suggesting that the rise in his popularity is less on his personal allure and more to do with emergency aid payments.

Government allows foreigners back into Brazil

The Brazilian government has lifted restrictions on the entry of foreign nationals at every airport in the country — revoking a March rule barring it in six states. A 30-day restriction remains for the entry of foreigners by land and sea. Venezuelan citizens, however, are granted an exception due to humanitarian reasons.

Why it matters. Brazil is lifting restrictions as many countries experience a second wave of coronavirus infections — raising uncertainty about the progression of the pandemic.

Restrictions. That kind of uncertainty is already being observed in Brazil — namely in the state of Amazonas, which was the first in the country to experience a full-scale collapse of its healthcare system. Authorities had lifted restrictions on commerce and tourist locations, but infection curves have increased in recent weeks — forcing the state government to shut down bars, public events, and resorts.

Rio Mayor declared ineligible for office

One day after the Rio de Janeiro State Congress moved forward with its impeachment process against Governor Wilson Witzel, the mayor of the city of Rio de Janeiro was declared ineligible for office. A state electoral court found Marcelo Crivella guilty of “abuse of economic power,” an electoral crime — and could suspend his political rights for eight years.

  • In 2018, the mayor used a City Hall event to canvass votes for his son, who launched an unsuccessful bid for Congress.

Why it matters. The decision comes 52 days before the November 15 municipal elections, when Mr. Crivella will fight for re-election (with the veiled support of the Bolsonaro family).

What happens now. Mr. Crivella will probably be able to run in November, as he will be entitled to multiple appeals until the case reaches the Superior Electoral Court and Supreme Court — a process that could take years.

Rio’s mayoral race. Rejected by 75 percent of the Rio electorate, the incumbent Mr. Crivella could fail to make it to the runoff stage altogether. According to the latest polls, he is tied for second place in a race being led by former Mayor Eduardo Paes — who is facing corruption charges.

What else you need to know today

  • Vaccine. The Brazilian federal government announced it would set aside BRL 2.5 billion (USD 453 million) to join the COVAX Facility, a worldwide initiative that brings together governments and manufacturers to ensure future Covid-19 vaccines reach those in greatest need, whoever they are and wherever they live. The government says the move will allow the country to “guarantee the immunization of 10 percent of the population by the end of 2021” when a vaccine is available.
  • Aviation. The first Gripen fighter jet to be delivered by Swedish manufacturer Saab to the Brazilian Air Force made its maiden flight yesterday — a 1-hour journey between Santa Catarina and São Paulo. Back in 2014, Brazil bought 36 Gripen jets — deliveries shall happen between 2021 and 2026.
  • Oil and gas. Supreme Court Chief Justice Luiz Fux scheduled for September 30 a trial on whether or not state-controlled oil giant Petrobras can slice up its assets into multiple subsidiaries to speed up their privatization. Senate President Davi Alcolumbre says the firm plans to circumvent Congress’ prerogative to block privatizations. As we explained on Wednesday, the sale of refineries is a cornerstone of Petrobras’ divestments plan — suspending it would delay the company’s deleveraging.
  • Environment 1. A Federal Police investigation concluded that the fires responsible for destroying 25,000 hectares of the Pantanal wetlands were started within four large properties in the Corumbá region, close to the Bolivian border. According to Brazil’s Institute of Geography and Statistics, the country lost over 8 percent of its natural vegetation between 2000 and 2018 alone — an area almost the size of Spain.
  • Environment 2. Nubank became the first bank in Brazil or Mexico to neutralize all or its carbon emissions, after being founded in 2013. The company will support three projects to offset 4,300 tons of carbon dioxide. Nubank pointed out that digital banks are responsible for fewer emissions than traditional ones. Days after Nubank’s announcement, investment bank BTG Pactual said it offset 13,000 tons of carbon dioxide to compensate for its 2019 emissions.
  • New book. Former Health Minister Luiz Henrique Mandetta launches his new book today: “A patient called Brazil,” in which he gives his perspective on the last 87 days of his time as a member of the Jair Bolsonaro administration. Mr. Mandetta singles out the president’s Covid-19 denialism as the biggest problem in tackling the pandemic. “First, he denied the Covid-19’s severity, calling it ‘the sniffles.’ Then, he got mad at the doctor, that is, me. Then, he aimed for a miracle: believing in chloroquine,” writes the former minister.[/restricted]

Ibope: Bolsonaro’s approval ratings grow 11 points compared to 2019

As reported by an Ibope survey this Thursday, 40 percent of Brazilians rated President Jair Bolsonaro’s government as either ‘great or good’ in July — an increase of 11 percentage points when compared to his approval ratings at the end of last year. Meanwhile, 29 percent classed the current administration as ‘bad or terrible.’ 

As The Brazilian Report has explained, one of the main reasons for this jump in Mr. Bolsonaro’s approval rating is the Covid-19 emergency salary program, paying BRL 600 (USD 108) each month to informal workers and the unemployed. However, the payment has now been cut to BRL 300 a month. During his speech at the 2020 UN General Assembly on Tuesday, Mr. Bolsonaro incorrectly claimed that the initiative had paid USD 1,000 to each beneficiary.

The Ibope survey polled Brazilians on their perceptions of several federal government sectors. Fifty-one percent had positive opinions about “public security,” while the “tax sector” fared the worst, seen in a negative light by 67 percent. 

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Brazil Daily

France’s Macron asked to “bury” Mercosur-EU deal

Today, we look at the financial consequences of Brazil’s nonchalant approach to deforestation. The reduction in the emergency salary for vulnerable populations. And the Bolsonaros’ continuing legal problems.

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Pressure mounts as Brazil’s environmental tragedy continues

The Amsterdam Declaration Partnership, a group of eight European nations currently led by Germany, [restricted]has urged Brazil to take “real action” against deforestation in the Amazon. “While European efforts are aiming at achieving deforestation-free supply chains, the current trend of rising deforestation in Brazil is making it increasingly difficult for businesses and investors to meet their environmental, social, and governance criteria,” the group said in a two-page letter to Vice President Hamilton Mourão.

Why it matters. The signatory countries of the Amsterdam Declaration Partnership accounted for 10 percent of Brazilian agricultural exports in 2020.

  • Meanwhile, a group of 30 NGOs, including Greenpeace France, demanded that French President Emmanuel Macron “bury once and for all” the EU-Mercosur free-trade deal, citing its possibly “disastrous” impacts on forests, the climate, and human rights.

Reaction. VP Mourão said he plans on taking foreign ambassadors to visit the Amazon region. And President Jair Bolsonaro called international outcry a “disproportionate” reaction.

Strange bedfellows. The government’s nonchalance has sparked a curious alliance in Brazil. A group of 230 institutions, including both agricultural producers and environmentalist NGOs, have teamed up to propose anti-deforestation proposals. Major producers fear losing markets due to the country’s increasingly pariah-like image created by the recent spike in deforestation rate.

  • One of the firms involved in this pledge is meat giant JBS — recently cited in a report stating that its supply chain includes — directly and indirectly — farms that may have deforested at least 1.7 million hectares of native vegetation in the Amazon and the savannah-like Cerrado biome since 2008.

Wildfires. European pressure ramps up as fires in the Pantanal wetland region continue to rage uncontrolled. Smoke particles from the Pantanal fires should reach the state of São Paulo today — which could cause “black rain” over the weekend. A similar phenomenon has already been observed in Brazil’s South over the past few days. It is possible that the smoke could travel as far as the Rio de Janeiro coast. In multiple states, the sky could turn a shade of orange. 

deforestation smoke
Smoke particles traveling through South America. Image: EAS/Copernicus

The new emergency salary

The government starts today a new round of payments of the coronavirus emergency salary. For the first time, its value will be only BRL 300 (USD 57) instead of the usual BRL 600. In order to maintain the aid until the end of the year, the government halved its value due to budgetary constraints.

Why it matters. The aid program has accounted for 97 percent of the income for the country’s poorest 10 percent. This group will lose 44 percent of its purchasing power instantly.

Political challenges. The emergency salary has also boosted Jair Bolsonaro’s approval ratings. As the benefit is reduced, we will observe and report back how voters react.

  • The latest opinion polls show a downward trend in the president’s popularity. On August 19, 52 percent of Brazilians approved of his administration — a rate that is now down to 49 percent. While the difference is marginal, analyzing polls is more about the curve rather than looking at the isolated numbers.

Bolsonaro tries to avoid in-person testimony

The Solicitor General’s Office has appealed a decision by Supreme Court Justice Celso de Mello denying President Jair Bolsonaro the possibility of giving a written testimony during a probe on whether he illegally interfered with the Federal Police. The benefit is often granted to heads of state in similar situations, but Justice Mello said he will treat the president “like any other citizen under investigation.”

  • The president has already been summoned by the Federal Police, who proposed three alternate dates for a deposition next week.

Why it matters. While the investigation will likely go nowhere, as the prosecutor general — who is in charge of probes against the president — has done everything in his power not to go against Mr. Bolsonaro’s interests. Still, it could further damage an already strained relationship between the Supreme Court and the government.

Running out the clock. Justice Mello’s mandatory retirement will begin in November, when he reaches 75 years old. The government is trying to stall the case as much as possible, so that it would fall into the hands of another justice. There is even the possibility of the case going to Justice Mello’s replacement — who would be picked by President Bolsonaro.

Meanwhile … Two of the president’s politician sons — Carlos and Eduardo Bolsonaro — were also summoned to testify in an investigation into antidemocratic rallies that called for the shutdown of Congress and the Supreme Court. The probe was started based on the National Security Law — an instrument dating back to the dictatorship that was used to silence political opponents. 

What else you need to know today

  • Infrastructure. Communications Minister Fábio Faria said five companies are willing to compete for the privatization of Correios, Brazil’s state-owned postal services firm. He only named four: retailers Magazine Luiza and Amazon Inc, as well as logistics giants DHL and FedEx. Correios employees initiated a strike on August 17, protesting against the government’s intention to privatize the company, as well as asking for better working conditions.
  • Interest rates. As expected, the Central Bank’s Monetary Policy Committee kept Brazil’s benchmark interest rate Selic at 2 percent a year — breaking a streak of nine straight cuts. The committee says “short-term inflation will rise due to a temporary food price increase and to a partial normalization of some service prices,” adding that further cuts to the Selic rate will be small — if they happen at all. 
  • Coronavirus. House Speaker Rodrigo Maia announced that he tested positive for Covid-19. So far, Vice President Hamilton Mourão remains as the only person in the presidential succession line not to have been infected by the coronavirus — President Bolsonaro, Mr. Maia, Senate President Davi Alcolumbre, and Supreme Court Chief Justice all have. 
  • Schools. With the 2020 academic year already compromised, Brazilian private schools are making their financial plans for 2021 — and face a true conundrum. If they raise tuition fees too much, they could lose students as most families have lost revenue during the pandemic. But raise them too little, and they could hurt their finances. A decision must be made by December 15.
  • Rio. State lawmakers in Rio will vote today on whether to hold an impeachment trial against suspended Governor Wilson Witzel — who is accused of embezzling funds earmarked for the fight against the coronavirus. Meanwhile, the state capital’s City Council will vote on whether to open impeachment proceedings against Mayor Marcelo Crivella, suspected of siphoning public money and laundering it through evangelical churches.
  • Budget 2021. Senator Márcio Bittar, the rapporteur of the 2021 budget in Congress, said President Jair Bolsonaro authorized him to include a new welfare program in next year’s budget — just a day after Mr. Bolsonaro said the subject was not to be discussed within his administration anymore. “It’s better if we create this program now, so millions of people can have a good holiday season,” said Mr. Bittar, who admitted he has no idea where the money will come from.[/restricted]

Half of emergency salary beneficiaries support Bolsonaro

According to a survey by Poder Data, backed by news website Poder 360, 50 percent of Brazilians who received the government’s Covid-19 emergency salary approve of President Jair Bolsonaro. Researchers interviewed benefit recipients between August 31 and September 02. The report showed a slight decrease of 5 percentage points compared to the previous period of analysis, carried out between August 17 and 19.

As The Brazilian Report has shown, the coronavirus financial aid has boosted Mr. Bolsonaro’s support among poorer classes, and has raised his popularity to the highest level since taking office in 2018. Despite President Bolsonaro’s Covid-19 denialism, the BRL 600 aid program showed the “price” of a president’s popularity.

Now, the federal government announced an extension of the emergency salary, cutting the monthly benefits to BRL 300.

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Brazilians second-most eager for Covid-19 vaccine

This week, President Jair Bolsonaro caused a stink by declaring, during a conversation with supporters, that “no-one can force anyone to take a Covid-19 vaccine,” stoking fears of a burgeoning anti-vax movement in Brazil as the country faces the worst pandemic in living memory.

However, the data does not corroborate the idea that potential immunization would be anything but welcome in Brazil — in fact, the country is the second-most eager to receive the vaccine, according to a recent study.

An Ipsos-Mori poll surveyed adults from 27 countries, asking whether they would take a Covid-19 vaccine if it were available. Though China was by far the most eager for immunization — 97 percent said they would take coronavirus vaccines — Brazil was ranked second, with 88 percent of respondents in favor of being inoculated. In the U.S., where the anti-vax movement is more established, 33 percent of people were opposed to a potential vaccine.

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Coronavirus Power

How Bolsonaro deflected blame for coronavirus debacle

Back in July, digital influencer Felipe Neto published an op-ed video on The New York Times, arguing that Donald Trump isn’t the worst pandemic president, and that the inglorious title belonged instead to Brazil’s Jair Bolsonaro. The YouTube personality joined a substantial crowd of critics — among them politicians, economists, and health experts — who denounce Mr. Bolsonaro’s nonchalance vis-à-vis the coronavirus. “He shows no sign of taking the crisis seriously,” said Mr. Neto.

And despite the overwhelming criticism — and no shortage of evidence of the Brazilian government’s ineptitude to manage a sanitary and economic crisis — Mr. Bolsonaro felt safe enough to say last week that no other administration in the world has fought the pandemic better than his. “It makes us proud. It shows that there are people who are talented and concerned, especially with the poorest, the most humble,” said the president. His self-aggrandizement, however, completely disregards coronavirus success cases such as South Korea or New Zealand.[restricted]

But while it might be ludicrous to say that a country with 3.6 million confirmed infections and nearly 117,000 deaths has been the best at dealing with the pandemic, the truth is that Mr. Bolsonaro amazingly managed to deflect any blame for the health crisis away from himself. A few months ago, many foresaw that the coronavirus would be the president’s demise. Resilience, however, has been one of the adjectives better suited to Mr. Bolsonaro. Not only haven’t his approval ratings plummeted, the president is now as popular as ever, thanks to paying a BRL 600 emergency salary to informal and unemployed workers during the pandemic.

An opinion poll shows that 47 percent of Brazilians believe he has “no blame” for the country’s coronavirus deaths — with only 11 percent stating that he is the “main person to blame” for the crisis.

How has the Brazilian head of stage managed to pull this off?

How Bolsonaro deflected blame for coronavirus debacle
Jair Bolsonaro among supporters. Photo: Isac Nóbrega/PR

Bolsonaro’s strategy (or lack thereof)

Jair Bolsonaro has undermined Covid-19 since the beginning of the pandemic, dismissing the disease as a “little flu,” and comparing its risks to those of being “caught in the rain.” He repeatedly sparked public gatherings and has refused to wear a mask on numerous occasions. Within his administration, masks have been politicized as a leftist symbol, and not wearing protective gear has become a badge of honor — helping transform the presidential palace into a coronavirus hotbed.

Mr. Bolsonaro also pushed against the quarantine efforts of Brazil’s governors and mayors, and research shows that social isolation lowered in areas where the president is most popular. Mr. Bolsonaro appears to believe that containing the virus is impossible, meaning that there would be no point in trying to slow down its spread. “This virus is like rain, that is going to get 70 percent of [Brazilians] wet,” he told supporters in April. At some point, asked about the high number of deaths, he answered: “It’s fate.”

According to pollster Datafolha, 22 percent of Brazilians think there was nothing the government could do to avoid the sheer amount of deaths in the country. Two researchers from the University of São Paulo, however, completely disagree.

“We believe that herd immunity can be achieved in various regions of the country, but this in no way means that we should not intervene during the course of the epidemic — precisely the opposite. With the control measures, the peak will be lower; herd immunity may be reached a little later, but the final size of the epidemic will be smaller,” say Rodrigo Corder, an engineer Ph.D. candidate, and Marcelo Ferreira, who holds a Ph.D. in parasitology studies, speaking to The Brazilian Report

As Mr. Bolsonaro pats himself on the back, many Latin American nations — including those whose governments took the coronavirus seriously — have been suffering a high-scale growth in cases and deaths. Peru and Chile, for example, have more deaths and cases per million people than Brazil.

But Messrs. Corder and Ferreira think that the mistakes made by other governments do not make Jair Bolsonaro’s performance any better. “Social isolation is just one of the necessary measures to control the pandemic. But several others must be applied simultaneously. Extensive testing and contact tracing is a crucial strategy that has been completely neglected in Brazil and most of Latin America.”

In Brazil’s case, they point out several mistakes beyond the government’s denialism and disdain for isolation measures. The staunch backing of hydroxychloroquine as a measure to treat Covid-19, publicly supported by the president, is among the mistakes listed.

“Some states and municipalities are spending precious resources to purchase drugs such as chloroquine, ivermectin, and azithromycin, none of which have proven to be effective against the virus. Meanwhile, there is a shortage of diagnostic tests. Municipalities have been waiting for tests promised by the Health Ministry for more than three months. This shortage prevents contact tracing and the planning of health actions in the absence of reliable data.”

The blame game: where the buck stops

Even after 117,000 deaths and the several mistakes pointed out by scientists, the opposition, and the press, Jair Bolsonaro is not seen as the one to blame by many Brazilians. This can be put down to multiple reasons, including the president’s propaganda effort to avoid responsibility. 

After a moment of denialism, the president adopted a strategy to divert blame when the number of deaths started rising fast. His first target was the Supreme Court, which he said hamstrung his government by preventing him from interfering with quarantine measures in states and municipalities. He claims his administration did everything it could, sending money to governors and mayors.

Political scientist Ricardo Ceneviva, a professor at research institution Iuperj, says the president was successful in creating confusion around the responsibilities regarding the pandemic. For him, the allocations of responsibilities are unclear for citizens and Mr. Bolsonaro took advantage of this. “Brazil’s division of responsibility among federal, state, and municipal governments makes it hard for the average citizen to place the blame for a crisis. Moreover, the Supreme Court’s decision not to force the government to step in helped create this narrative confusion,” he tells The Brazilian Report.

But between the evidence of failure and the propaganda to the contrary, Mr. Bolsonaro has been gathering success. While his performance during the pandemic has not been praised, he has at least been able to avoid the public blame.

“It’s hard for most people to think about counterfactual scenarios. It is not simple to project how the country would be if the president had acted otherwise; if the government had exercised its role properly. What would the country be like now? The average citizen does not think like this, that the situation could have been different. They are stuck in the here and now,” reflects Mr. Ceneviva.

The assessment of how Jair Bolsonaro has managed the pandemic has been improving steadily, hand-in-hand with his general approval ratings. More Brazilians rate his government as “great or good” in general terms than at the beginning of the year, which affects how they see his coronavirus response. 

This trend of increasing popularity is also why Mr. Ceneviva does not think that the dispute over the blame for the Covid-19 crisis is done. Asked if the president has won the narrative battle, he says that while Mr. Bolsonaro has been helped by the government’s emergency aid program, the end of this initiative could see these trends quickly reversed. “The numbers are a snapshot of the moment. As the deaths do not seem likely to fall dramatically anytime soon and with the emergency aid decreasing, it is rash to say that he will avoid responsibility at the end of the day”

Health experts believe Brazil’s Covid-19 epidemic will be re-examined as a case study in the coming years. “At the federal level, we are unable to point toward any significant adjustments. […] It is a tragic example in public health, a sure path to disaster,” say Messrs. Corder and Ferreira.[/restricted]

Brazil Daily

When will things return to ‘normal’ in Brazil?

Today, we look at when Brazilian companies are hoping to return to their normal, pre-pandemic levels of activity. The difference in coronavirus concerns between rich and poor populations. The Economy Ministry’s plan to boost investment while avoiding ballooning public debt.

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When Brazilian companies believe the “new normal” will begin

The “new normal” is 2020’s top cliché. [restricted]It has been used in many ways to describe how the coronavirus pandemic will change societies and how the economy functions. We know that companies will have to overhaul their sanitary protocols and how office spaces operate, if they even return to traditional office work at all. But with many economies sliding into what is shaping up to become the worst crisis of the past century, there is uncertainty around when this “new normal” will begin.

  • A survey by the Brazilian Institute of Economics at think tank Fundação Getúlio Vargas (IBRE-FGV) shows that only 25 percent of Brazilian companies say they are operating at “normal levels.” And 10 percent still have no idea of when they will be able to do so.

Why it matters. The services sector, which is the backbone of the Brazilian economy, is the most pessimistic about the recovery. Only 17 percent of these companies are operating normally and no less than 47 percent expect normalcy from 2021 on, with 15 percent not being able to visualize any sort of return to pre-pandemic levels.

More pessimistic sectors. One takeaway from the survey is that 20 percent of companies working with transportation and logistics services have no idea when they will return to normalcy. Economist Renata Franco writes, however, that the result could be much worse, as the sector also includes passenger transportation segments, one of the worst-hit by the pandemic. That pessimism was offset by delivery companies, which benefited from the e-commerce boom created by social isolation.

  • A different survey, by market research company Talk Inc, helps explain the uncertainty of passenger transportation firms — as 53 percent of Brazilians don’t want to fly until next year. And 22 percent say they will only hop on another plane once a Covid-19 vaccine is available.

Where optimism about the “new normal” lies. One positive highlight comes from the non-durable goods sector, which encompasses food, cleaning, medicine, and clothing. Meanwhile, producers of durable goods have recorded the lowest rate of uncertainty, with only 1.3 percent saying they can’t visualize a return to normalcy.

Bottom line. Segments considered to be “essential” managed to reestablish themselves more rapidly once social isolation measures began being lifted. Meanwhile, non-essential sectors continue to suffer — and services companies will continue to be harmed while uncertainty about sanitary conditions remains.

What worries Brazilians

At this point, it has become quite clear that the coronavirus is not the “great equalizer,” as some tipped it to be at the beginning of the pandemic. While the virus is the same in the way it affects infected people, socioeconomic factors are a huge determinant of how populations are able to confront the crisis. Besides surveying companies, IBRE-FGV also looked at consumers to measure the impacts of the pandemic on them.

Main takes. The higher the income, the more people are concerned about their wellbeing (health risks and social isolation issues). Poor populations, on the other hand, have much greater concerns for their finances.

  • Poor families felt a much steeper deterioration of their family finances during the pandemic. Not only because they work in less-qualified, more informal and “disposable” jobs, but also because inflation has been higher among basic necessities. A July study by the Institute for Applied Economic Research (Ipea) showed that, for the wealthy, inflation between January and July has been at -0.24 percent. For the poor, +0.77 percent.

Paradox. The survey brings a curious piece of data: low-income Brazilians were those who felt the pandemic harder — and also those who felt its effects the least. It is counterintuitive, but economist Renata Franco writes that “while these people lost most of their income, the government’s coronavirus emergency salary offset much of these losses.”

  • Reporter José Roberto Castro showed on The Brazilian Report that there are 14 million people currently with no source of income. Zero. They rely entirely on the emergency salary paid for by the government.

Guedes’ plan to foster foreign investment

The Economy Ministry kicked off a public consultation to hear from companies about their top priorities in terms of deregulation. The so-called “Agenda for improving the regulatory framework of the investment environment” is one of Minister Paulo Guedes’ main gambles to foster investments — and appease the military wing of the government — while avoiding an explosion of public debt.

Why it matters. Control over the federal budget has pitted the Economy Ministry — filled with deficit hawks — and the administration’s military wing, which favors a more hands-on approach to the economy.

Context. Earlier this month, the Economy Ministry also launched the National Plan of Investments. Divided into three pillars, it proposes actions until 2022 — and relies heavily on improving current regulations.

  • Moreover, Mr. Guedes’ team is reportedly working on an internal effort dubbed “The Great Deregulation,” which plans to revise and revoke what it sees as “outdated norms.”

What else you need to know today

  • Congress. After the government was “blindsided” by the Senate’s decision to unfreeze civil servant wages despite the current fiscal crisis, lawmakers in the lower house came to the administration’s rescue. With help from Speaker Rodrigo Maia, the government managed to build a sizable majority and upheld a presidential veto on pay raises to public servants in 2020 and 2021. 
  • Education. The São Paulo City Hall believes that a return to in-person classes is “unlikely” to happen this year. Municipal serological studies to monitor the spread of the coronavirus in Brazil’s largest city pointed out a high rate of children who caught the virus but showed no symptoms — becoming potential superspreaders. Mayor Bruno Covas has already ruled out a return to classrooms in September, but will only make a decision for the remainder of the year after the next three serological surveys.
  • Justice. In a 9-1 vote, the Supreme Court ruled that the government must immediately suspend any efforts to produce dossiers with personal information of citizens who declare themselves “anti-fascist.” The decision states something that should be obvious: the government cannot monitor citizens who are not under formal investigation. Almost 600 civil servants and law enforcement agents had their private information compiled by the Justice Ministry, and the secret document was shared with police departments across the country, as well as to the office of the president’s Chief of Staff.
  • Race. Brazil’s Superior Electoral Court is analyzing a request to force political parties to implement racial quotas for black and mixed-raced candidates, which would also be applied when distributing campaign funds from the parties’ electoral funds. Black candidates receive less funding and time on parties’ TV ads, and remain largely underrepresented in politics, occupying only 5 percent of elected seats. However, it is debatable whether this kind of quota is effective. Electoral rules say parties must give a minimum of 30 percent of campaign funds to female candidates — but many bypass the law by using dummy candidacies.[/restricted]

Jair Bolsonaro has never been safer from impeachment

Last week, Economy Minister Paulo Guedes issued a public warning to President Jair Bolsonaro. Speaking to the press, the embattled cabinet minister said some of the head of state’s advisors are pushing the president into the “impeachment zone” by demanding more public spending. 

While certainly strong-worded, the only reason Mr. Guedes felt within his rights to issue such a warning is that impeachment is not on the table for Mr. Bolsonaro. Three and a half months after political pundits traded predictions on how long the president would last in office — after former Justice Minister Sergio Moro accused him of illegally meddling with the Federal Police for personal benefit — ousting Mr. Bolsonaro seems to be a very remote possibility indeed.[restricted]

That isn’t for a lack of justifications, either. In the months following Mr. Moro’s resignation, the number of coronavirus deaths in Brazil has risen uncontrollably, with almost 110,000 fatal victims of Covid-19 at the time of publication. In Brazil and abroad, Jair Bolsonaro’s denialism about the severity of the pandemic has been elected as the main reason for the country’s botched coronavirus response. 

Major television and print media have run editorials affirming that the president’s behavior is in violation of the Constitution, yet such criticism has had no practical consequences.

Beyond claims of negligence concerning the Covid-19 pandemic, there are also criminal investigations surrounding President Bolsonaro and his sons. The eldest Bolsonaro child, Senator Flávio Bolsonaro, is suspected of having misused government funds when he was a state lawmaker, taking cuts from his staffers’ paychecks. The alleged operator of this corruption scheme and long-time friend of the Bolsonaros, Fabricio Queiroz, is currently on house arrest.

Rio de Janeiro city councilor Carlos Bolsonaro — President Bolsonaro’s second-eldest son — is also in hot water, being at the center of a federal probe concerning an underground (and illegal) fake news network.

Stirring up trouble

Jair Bolsonaro himself has given plenty of discomfort to the other branches of government in Brasília, attending several anti-democratic street demonstrations demanding the closure of the Supreme Court and Congress. 

According to monthly magazine Piauí, President Bolsonaro even threatened to launch a military intervention in an April 22 meeting, saying he would close the Supreme Court and kick out all 11 justices. He was subsequently talked down by some of his closest advisors. The Brazilian Report was able to confirm the veracity of this story and found that the head of state has in fact discussed launching a self-coup on a number of occasions in behind-the-scenes talks. However, not even this blatant disregard for democracy has been enough to mobilize any real threat of impeachment of President Bolsonaro.

Rodrigo Maia, the speaker of Brazil’s lower house of Congress, has said that he does not see any reason for impeachment proceedings to be opened against Mr. Bolsonaro. The two have been at loggerheads ever since the president was sworn in on January 1, 2019, and Mr. Maia is the only politician with the power to accept or dismiss impeachment requests against the head of state. Yet, he appears reticent to do so.

“Impeachment is something we have to be very careful about. It cannot be an instrument for solving crises, and it is necessary to have a legal basis. And I still don’t find any legal basis to do it,” declared Mr. Maia, in early August.

bolsonaro impeachment no way
President Jair Bolsonaro during a trip to the Northeast. Photo: Marcos Côrrea/PR

In theory, Brazilian presidents may be impeached when they commit a crime. However, the evaluation of whether certain conduct constitutes a crime worthy of expulsion from office lies solely with Congress, making this formal ousting process a wholly political calculation, as opposed to being carried out by the letter of the law.

Besides the existence of an offense upon which to base the impeachment request, political scientists point that for Congress to willingly remove a president, two other factors are crucial: political consensus about who will step in as the replacement, and low popularity, leading to widespread public demonstrations. For now, Jair Bolsonaro is safe on both counts.

“Finding a reason is very easy, as Brazil’s experience [with impeachment] tells us: Dilma Rousseff’s case, for instance, was on a technicality. In Mr. Bolsonaro’s case, with his management of the pandemic, the shady links to paramilitary police mafias, the behavior of his sons, finding a reason to justify an impeachment would be relatively easy. The point is to have a consensus in the political environment, in Congress, that the impeachment is desirable for the country and for the political system itself,” analyses political scientist Bruno Carazza, a professor at private research institution Ibmec.

Support from Congress

While Mr. Bolsonaro has taken part in protests against Congress, standing arm-in-arm with supporters demanding parliament be shut down, this has not necessarily affected the pragmatic view most members of Congress have toward him.

According to regular surveys carried out by financial services firm XP Investimentos, President Bolsonaro has always kept a safe margin of support to avoid the risk of impeachment. Were Rodrigo Maia to decide to open proceedings to remove Mr. Bolsonaro from office, the head of state would be able to block the case with one-third of votes from Congress. 

At his lowest point of support among members of the lower house, Mr. Bolsonaro had 35 percent in his favor — this has since increased.

“One explanation is the harmony between the agenda of both Mr. Bolsonaro and Congress. Lawmakers largely support the conservative platform of the government and [Economy Minister] Paulo Guedes’ economic plan, starting with House Speaker Rodrigo Maia,” says Mr. Carazza. 

No popular pressure in favor of impeachment

The president’s staunch denialism had a significant impact on his public popularity during the early weeks and months of the Covid-19 pandemic. After Mr. Bolsonaro called the disease a “little flu,” Brazilians across the country joined in on pot-banging protests from their window sills for two straight weeks, calling for the president to be removed. Crucially, however, these demonstrations didn’t make it to the streets, thus diminishing their impact. 

“At his worst moment, the pandemic made a street demonstration movement unfeasible, shielding him from popular pressure,” notes Mr. Carazza.

Now, despite recording over 100,000 deaths from Covid-19, Jair Bolsonaro has regained his approval rates. However, his support base has changed. While losing shares of the middle class, he has gained the support of poorer families due to the government’s program of paying an emergency salary to the unemployed and informal workers.

With around 30 percent of approval, Mr. Bolsonaro is safeguarded from impeachment. Traditionally, in order to seriously put their offices at risk, Brazilian presidents need to slip to around 10 percent of popular support.[/restricted]

Brazil Daily

Jair Bolsonaro has never been this popular

We’re covering today Jair Bolsonaro’s soaring approval ratings, the legal setbacks for the First Family, and a bill to ‘outlaw communism.’

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Bolsonaro’s approval ratings go up … 

Just days after Brazil topped the mark of 100,000 coronavirus deaths (the second-worst in the world), [restricted]President Jair Bolsonaro posted the highest approval ratings he has ever had since he took office in January 2019. The rate of voters who consider his performance as either good or great jumped from 32 to 37 percent — while the group which rates him as bad or terrible shrunk from 44 to 34 percent, according to Brazil’s most-renowned pollster, Datafolha.

Why it matters. The institute claims that of the 5 percentage points Mr. Bolsonaro gained, at least 3 come from informal or unemployed workers with family incomes of up to BRL 3,000 (USD 559) per month. That’s the demographic eligible to receive the government’s BRL 600 monthly emergency salary.

Effects of the emergency salary. While BRL 600 does not go a particularly long way, it is a much heftier aid program than renowned cash transfer initiative Bolsa Família — and it is more money than millions of people in Brazil have ever seen within a single month. The benefit single-handedly pushed Brazil’s extreme poverty rates down from 6.9 percent in 2019 to 3.3 percent in June.

  • Support for the president soared in the Northeast region (Brazil’s poorest), where Mr. Bolsonaro has always faced overwhelming rejection.
  • Polls from other institutes show a similar trend — and arrive at the same conclusion about the importance of the emergency salary to the president’s approval rating. “Mr. Bolsonaro substituted his support from the urban middle class with [working-class] groups in small and medium-sized cities,” said Mauricio Moura, chief executive officer at polling company Ideia Big Data, speaking to The Brazilian Report.

Bolsonaro’s approval among elites. “[The president’s] softening of his authoritarian tone, with adaptation to his message, combined with the loosening of quarantine rules has provoked reflux in a negative trend with strategic segments, such as highly-educated voters with higher income and living in the Southeast. Approval for the president increased by 5 to 6 points after continuous drops since the start of the pandemic,” wrote Datafolha’s Mauro Paulino and Alessandro Janoni.

Urgency. The emergency salary costs the administration an astonishing BRL 50 billion per month, making it unsustainable in the long run. The government has said it plans to create a new, bigger cash-transfer program to replace Bolsa Família — but no proposals have been presented as of yet. That, however, might be Jair Bolsonaro’s ticket to re-election.

… but bad news keeps coming

Despite the rise in polls, things are not exactly rosy in the Bolsonaro camp. On Thursday, the Superior Court of Justice issued an order sending Fabrício Queiroz — a long-time friend of the president who worked as a fixer for his family — and his wife to return to jail after being transferred into house arrest. Mr. Queiroz is a key part in an investigation into a money-laundering scheme being operated within the office of Senator Flávio Bolsonaro, the president’s eldest son, and linked to First Lady Michelle Bolsonaro.

  • Fabrício Queiroz had been arrested in June, but was placed under house arrest in a highly controversial decision by a judge who is friends with the president.

Why it matters. Investigators hope Mr. Queiroz will flip on the First Family and collaborate with the probe. The fact that his wife will have to do time adds more pressure to the equation.

The scheme. Investigators believe Mr. Queiroz helped Flávio Bolsonaro force his staff to surrender part of their paychecks to the lawmaker. This practice is not uncommon in Brazil, being known as a “rachid scheme.”

  • Monthly deposits into the bank account of Mr. Queiroz coincide with the paydays of public servants at the Rio de Janeiro legislative assembly. The former driver made a total of 176 cash withdrawals from his bank account in 2016.
  • The suspicious activities include the former aide signing 21 checks in the name of First Lady Michelle Bolsonaro between 2011 and 2016, with a total value of BRL 72,000 (USD 13,200).

Not Willy Wonka. Flávio Bolsonaro is suspected of using real estate operations and a chocolate store as fronts to launder money. Brazil’s leading evening television news show Jornal Nacional ran a deposition of the man who sold the store to the now-senator, saying he sold candy for prices below those imposed on franchisers of mega chocolate-chain Kopenhagen — making up the difference in accounts by using embezzled money.

Congresswoman proposes outlawing communism

Carla Zambelli — one of the most staunchly pro-Bolsonaro lawmakers in Congress — submitted a bill that would outlaw communism in Brazil, equating it to Nazism. She proposes that those who propagate, sell, distribute, or bear Nazi and communist symbols should be incarcerated for two years.

Why it matters. This bill has zero chance of passing. Still, it offers a glimpse at the cultural war strategy of the far-right for the coming electoral cycles — continued fear-mongering about a non-existent “red scare” in Brazil.

Inspiration. Ms. Zambelli says her proposal comes from a 2015 Ukrainian law criminalizing Soviet symbols and sympathy for communism.

Brazil-maidan. As Brasília correspondent Renato Alves showed back in May, one faction of Bolsonaro-supporting politicians and digital influencers have decided to galvanize their far-right followers, urging them “to Ukraine” Brazil — a reference to the Euromaidan protests in 2013.

  • This group staged demonstrations in Brasília that were inspired by the U.S. Ku Klux Klan and called for the shutdown of Congress — even suggesting that the daughters of Supreme Court Justices should be raped and murdered. Six leaders of this movement were briefly arrested in June.

Radicalization. This movement only highlights an ongoing process of intense radicalization in Brazil. Political violence has become more frequent, with high-profile crimes in 2018, such as the assassination of Rio de Janeiro City Councilor Marielle Franco, shots being fired at a campsite where former President Lula was campaigning — and, of course, the assassination attempt against Jair Bolsonaro.

What else you need to know today

  • Lebanon. A Brazilian diplomatic mission arrived in Beirut on Thursday afternoon, carrying roughly 6 tons of medicines and food. “Another 4,000 tons of rice will arrive in the short term,” said former President Michel Temer, who heads the delegation. 
  • Telecoms. After drawing several bidders for its mobile operations, Oi Telecom has announced a new version of its recovery plan — which now includes selling part of its pay-TV business. Plus, the company reported in a securities filing that, “due to widespread demand” by at least ten companies, it is elevating the minimum bid for its fiber-optic subsidiary from BRL 6.5 billion to 20 billion. 
  • Aviation. Azul Airlines, Brazil’s third-largest carrier, posted BRL 2.9 billion in losses for Q2. Due to the pandemic, Azul’s revenue dropped 85 percent — forcing the company to renegotiate debts. According to CEO John Rodgerson, Azul managed to get 98 percent of lessors to agree with the postponement of payments. 
  • Coronavirus 1. The Chinese municipality of Shenzhen announced they have found traces of the coronavirus in frozen chicken wings imported from Brazil. Despite no public indication of bans of Brazilian animal products, the report causes concern in local authorities. Brazil’s Agriculture Ministry is treating the case as an “alleged contamination,” adding that the country hasn’t received any official warning. In a statement, Brazilian authorities say they are “looking for official information to clarify the circumstances of the alleged contamination.”
  • Coronavirus 2. Brazilian scientists announced a potential breakthrough in the fight against Covid-19 today at the National Academy of Medicine. Horses injected with the Sars CoV-2 protein — responsible for the infection of human cells — developed neutralizing antibodies that were 20 to 50 times more potent against the coronavirus. The next step will be the approval of clinical studies and tests on humans, in order to ascertain the safety of this potential treatment for Covid-19.
  • Rio de Janeiro. The political crisis in Rio could reach new heights. Former State Health Secretary Edmar Santos — arrested in July for heading a corruption scheme that embezzled over BRL 1 billion in funds for coronavirus projects — reportedly recorded conversations with Governor Wilson Witzel and Pastor Everaldo, chairman of Mr. Witzel’s Social Christian Party. Mr. Santos is willing to turn the conversations over to prosecutors as part of a plea bargain agreement. (In Brazil, everyone is legally allowed to record their own conversations, even when other parties are not aware).[/restricted]

Who controls the purse strings in the Brazilian government?

The Jair Bolsonaro administration may be going through a defining moment regarding its economic policy. Some of the president’s key advisers — including the government’s military wing — advocate for increasing public spending in order to offset the economic effects of the pandemic and kickstart the economy. This would include major infrastructure projects, as well as social policies — in a clear strategy to make Mr. Bolsonaro’s re-election in 2022 viable.

These advisers are clashing with the government’s pro-austerity branch, headed by Economy Minister Paulo Guedes. Since the 2018 campaign, Mr. Guedes has been the “guarantor” of Mr. Bolsonaro’s economic policy — the insurance that the government would guide itself through pro-market reforms, employing the utmost zeal to tame public spending.[restricted]

As the backdrop to this dispute, the government is preparing its draft of the 2021 budget, which must be submitted to Congress by the end of the month. At stake is one of the most effective instruments to tame the public deficit: the federal spending cap. Created late in 2016 amid considerable controversy, it states that the federal budget can only grow from one year to the next in order to match inflation. 

Behind the scenes, however, the government is trying to create breathing room to spend more money. Earlier this year, Congress voted on the creation of a so-called “War Budget,” creating a separate budget for spending related to the Covid-19 pandemic — and now the tug of war will decide if other spending areas will be included as “exceptions” to federal spending rules.

Or, whether this parallel budget may be extended for an extra year — until December 2021. 

The Senate-affiliated Independent Fiscal Institute had already admitted there is no space to increase expenditures without breaking the cap. For 2021, mandatory spendings — including pensions and payroll — are likely to swallow up almost all of what is available.

Alessandra Ribeiro, director of Macroeconomics and Sector Analysis at consultancy firm Tendências, tells The Brazilian Report that the risk of noncompliance with the spending cap and fiscal disorder is increasing.

“The dispute is very heavy and will define what the government will be. Our risk perception regarding the fiscal framework, the changing in the spending cap, has increased a lot,” says the economist. “There is pressure for more expenses, whether that be with investment in public works or with an income program. These ideas gained strength with the pandemic because there were substantial effects on the economy. Add that to the municipal elections [to be held later this year] — in which this type of plan helps candidates — and the slowness expected for economic recovery.”

2021 budget: the battle over ‘Brazil’s Marshall Plan’

Issued from the barracks, cabinet members Walter Braga Netto (Chief of Staff) and Tarcísio Freitas (Infrastructure) have joined forces with Regional Development Minister Rogerio Marinho to launch a plan dubbed by government officials as ‘Brazil’s Marshall Plan,’ consisting of a vague list of potential infrastructure projects that would create jobs and reverse the recessive cycle. But Economy Minister Paulo Guedes compared the project to “pickpocketing the government.”

“We cannot be deceived. Growth comes from private investment, tourism, the opening of the economy, reforms. (…) Brazil failed because it followed the developmental model, Brazil stagnated. The policy was corrupted; the economy stagnated through excessive public spending. How is a broken government going to make big public investments?”

Brazil’s Marshall Plan was presented in April but has made no progress since. Officially, the cabinet ministers are currently analyzing which projects will be the priorities before releasing the list. The Infrastructure Ministry has reportedly requested BRL 40 billion (USD 7.5 billion) for projects, while Mr. Marinho wants BRL 35 billion. Local daily newspaper O Globo states the final list should be disclosed before September.

budget Paulo Guedes publicly compared the "Brazilian Marshall Plan" to “pickpocketing the government.” Photo: Marcos Corrêa/PR
Paulo Guedes publicly compared the “Brazilian Marshall Plan” to “pickpocketing the government.” Photo: Marcos Corrêa/PR

Tarcísio Freitas was the guest on the July 31 edition of President Jair Bolsonaro’s weekly live social media broadcasts. For almost an hour, he discussed his plans to resume work on infrastructure projects that are suspended due to a lack of funds.

The president’s eldest son, Senator Flávio Bolsonaro, publicly backed Mr. Freitas. “It’s an equation where you can’t do magic. On the one hand, Paulo Guedes does not want to spend because BRL 700 billion has already been spent fighting the pandemic. (…) On the other hand, I think there has to be some flexibility. (…) I believe that Paulo Guedes will have to find a way to get more money to continue these actions with a social and infrastructure impact,” the president’s son told newspaper O Globo.

Economist Alessandra Ribeiro sees no space for this spending without changing the rules of the federal cap. “The point is that there is a lot to fit in; the calculation doesn’t add up. If the government increases spending by BRL 40 billion, the cap is probably already going to be breached.”

According to Ms. Ribeiro, it is possible to accelerate public concessions to increase the amount of private capital in these projects. Still, this is not the most likely scenario and wouldn’t be completed in time for the 2022 election. “For this to happen, the macroeconomics has to be in order; it needs a perception of stability, that Brazil will fulfill its commitments. Without this macro stability, to attract long-term investors, this does not work.”

Support shifting and the emergency salary

The electoral process is something to be considered when analyzing the dispute over the funds. The pandemic has put stress on several different aspects of the government, beyond the management of public health. The fact that a significant share of the population is now out of work puts additional pressure on the president’s popularity.

Mr. Bolsonaro lost part of his original support base with his poor management of the Covid-19 crisis, but he has been able to retain popularity by gesturing to new followers. As things stand, the president’s reputation is being propped up by a region of Brazil that used to oppose him, and a wealth transfer measure his own government was firmly against.

At the beginning of the Covid-19 pandemic, Paulo Guedes was willing to provide unemployed and low-income Brazilians with an emergency salary of BRL 200 (USD 37) per month. After a long dispute and plenty of pressure from Congress, the Bolsonaro administration agreed to bump the value up to three monthly payments of BRL 600. Though it did so begrudgingly, this cash-transfer policy was the right move for Mr. Bolsonaro’s popularity. However, it comes at a monthly cost of BRL 50 billion for the public coffers.

The emergency salary largely assisted families in the Northeast region of Brazil, where President Bolsonaro traditionally polled poorly. His popularity then increased, and he has made a point of visiting the region more frequently, launching public works and promising other infrastructure projects.

A new alliance in Congress has influenced this shift. The Big Center — a group of small- and medium-sized conservative parties willing to exchange political support for control over parts of the budget — has agreed to side with President Bolsonaro, thus safeguarding the head of state from impeachment, for the time being. Many of the Big Center’s leaders hail from the Northeast, and rely on projects in the region to further their political goals.

The signs from Paulo Guedes

With his adversaries gaining importance, uncertainty about Paulo Guedes’ role in the government has emerged. According to analysts who spoke to The Brazilian Report, the Economy Minister is still seen as Mr. Bolsonaro’s guarantor for the financial market.

Last week, Treasury Secretary Bruno Funchal said the ministry does not want to break the federal spending cap: “no way.” 

“We want things to be as transparent and as correct as possible,” said Mr. Funchal, one of Mr. Guedes’ closest assistants.

According to economist Alessandra Ribeiro, the federal spending cap’s infringement could even result in the Economy Minister’s resignation. “We even see some signs that Mr. Guedes has been accepting more, but we don’t think he would approve fiscal irresponsibility. In our pessimistic scenario, he leaves the government in case it breaches the spending cap.”[/restricted]


Bolsonaro says emergency salary program “can’t continue for much longer”

On Wednesday, President Jair Bolsonaro indicated that the federal government’s emergency salary program — created to offset the negative financial effects of the pandemic — cannot be sustained for much longer. Mr. Bolsonaro explained that the program’s monthly cost of roughly BRL 50 billion (USD 9.45 billion) is taking a huge toll on federal finances and maintaining the benefit for an extended period of time would “break the Brazilian economy.”

“The economy needs to work. And some governors insist on keeping everything closed,” Mr. Bolsonaro said during Wednesday’s morning press conference.

The emergency salary — which pays BRL 600 monthly installments to low-income families and informal workers — has been the government’s most popular measure in mitigating the financial drawbacks caused by the Covid-19 crisis. Nearly half of Brazilian households qualified for the benefit and, according to think-tank Fundação Getúlio Vargas, millions of Brazilians have been lifted above the extreme poverty line (less than USD 1.90 per day) with the extra financial aid.

The emergency cash transfer program has also been a source of renewed popularity for Mr. Bolsonaro, who is starting to focus on low-income households for much-needed public support amid countless links to impeachment requests.

Yet, with over BRL 254.2 billion already spent on financing the emergency salary program and federal tax revenue down during the pandemic, the program’s financial strains are starting to wear down the federal budget. In comparison, the Bolsa Família cash transfer program cost the public coffers BRL 95 billion for the entirety of 2019.

The emergency salary was initially designed to be a three-month benefit running from April to June, but it has already been extended for two additional months, following Brazilian businesses needing to remain closed due to half-hearted isolation rates in the country.

Despite Mr. Bolsonaro’s comments, the Economy Ministry is studying the possibility of extending the emergency salary at a reduced installment rate until at least the end of 2020. Economy Minister Paulo Guedes has also suggested the creation of a new permanent cash transfer program named “Renda Brasil” (Income Brazil) to fully replace Bolsa Família in the near future.

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Poll projects Bolsonaro as favorite in all 2022 election scenarios

An opinion poll carried out by research institute Paraná Pesquisas and commissioned by Veja magazine suggests that President Jair Bolsonaro is on course for successful re-election in 2022, regardless of his opponent. This, despite his government’s shambolic handling of the coronavirus pandemic, which has resulted in over 84,000 deaths and counting.

The poll tested a number of first-round election scenarios, with a selection of different candidates. In each hypothetical race, Mr. Bolsonaro gained the most support, with percentages varying between 27.5 and 30.7 percent.

The survey also included potential electoral run-offs, pitting President Bolsonaro directly against opponents such as former President Lula, 2018 candidates Fernando Haddad and Ciro Gomes, ex-Justice Minister Sergio Moro, São Paulo Governor João Doria, and television personality Luciano Huck. Against all six, Mr. Bolsonaro would be victorious, according to the results.

Going by these outcomes, the president’s fiercest competitors in 2022 would be Lula and Mr. Moro, against whom Mr. Bolsonaro managed the smallest leads.

Recent polls have shown that the president’s electoral stock has risen thanks to the BRL 600 (USD 110) coronavirus emergency salary program. According to pollster Datafolha, Jair Bolsonaro’s approval ratings have increased in the Northeast region — which is most dependent on the emergency aid — and Center-West, which has the best economic numbers among Brazilian regions. On the other hand, Mr. Bolsonaro lost support in the North and Southeast, where the highest number of coronavirus cases have been seen.

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Bolsonaro’s approval ratings improve in July

According to an XP/Ipespe survey, 30 percent of the Brazilian population rated President Bolsonaro’s government as either ‘good or great’ in July, a 2-percent bump from June. Meanwhile, the number of people that considered Bolsonaro’s administration ‘bad or terrible’ fell by 3 percentage points, dropping to 45 percent. Both figures indicate a timid increase in Mr. Bolsonaro’s approval ratings over the past two months, especially among low-income Brazilians.

Prior to the Covid-19 pandemic, 46 percent of low-income Brazilians approved of the president’s administration as either good or great, a figure that rose to 48 percent last month and is now at 50 percent.

Mr. Bolsonaro’s increased popularity among low-income families is likely tied to the government’s distribution of a BRL 600 (USD 112) emergency salary during the pandemic, which has been vital in keeping millions of Brazilians from reaching extreme poverty. The popularity of the program has been such that the president is considering a reform of Brazil’s most successful welfare program Bolsa Família in a bid to further boost his approval ratings among low-income households.  

The perception that Mr. Bolsonaro is steering the economy in the right direction also rose from 29 percent in June to 33 percent in July. His approval figures now resemble his standing among Brazilians prior to the exit of Justice Minister Sérgio Moro in late April, which further fractured his electoral base. Yet, the president’s overall approval ratings are still a far cry from pre-pandemic levels.

The XP/Ipespe survey polled 1,000 Brazilians across the country between July 13 and 15 with a margin of error of 3.2 percent.

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70 percent of Brazilians not comfortable with return to in-person work

A study by market research company Ipsos shows that nearly 70 percent of Brazilians are still uncomfortable with the idea of returning to in-person work, amid efforts from state and municipal officials to reopen the economy for non-essential activities. According to Ipsos head Marcos Calliari, Brazilians were the most pessimistic and fearful regarding a return to work among the 16 countries that participated in the survey.

“Brazilians are, by far, the ones who feel least comfortable among all the surveyed countries with isolation measures,” said Mr. Calliari, in an interview with newspaper Valor. “We are talking about nearly 70 percent of Brazilians that do not feel comfortable coming back to work.”

He believes the reaction from Brazilians surveyed mirrors the current conditions the country is facing with new cases and death tallies still figuring at the highest end of the spread curve. Brazilians are also fearful about a possible return to in-person schooling, as 85 percent of interviewees do not feel comfortable allowing their children to return to in-person classes, despite state and municipal administrators already planning to reopen schools during the Brazilian spring.

The survey shows that Brazilians have a bleak vision of life in a post-pandemic world, with the majority fearing that the “new normal” will not bring back a significant portion of the jobs lost during the Covid-19 crisis.

In today’s Weekly Report, The Brazilian Report covered what the future of remote work may look like in Brazil.

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Bolsonaro popularity on the up despite Covid-19 chaos

It is becoming increasingly clear that the presidency of Brazil’s Jair Bolsonaro will neither be made nor broken by the coronavirus pandemic. Despite the country creeping toward the embarrassing total of 2 million Covid-19 cases and the tragedy of 75,000 deaths, Mr. Bolsonaro’s popularity is beginning to increase, according to a recent poll by Ideia Big Data.

As the timeline chart below shows, the percentage of Brazilians who classified Mr. Bolsonaro’s government as “bad or terrible” increased sharply during the pandemic, but this rejection is now falling since the beginning of June. Furthermore, those who believe the administration is doing a “great or good” job reached 30 percent, the highest level since late April.

Pollsters believe that this increase is linked to the government’s BRL 600 monthly coronavirus salary, which pays out aid to needy populations who have lost income during the pandemic. The administration is also keen to launch a new income transfer program before mid-August, entitled Renda Brasil, which would be a bid to maintain this support from lower-income families.

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Brazil Daily

Why is average income going up in Brazil?

We’re covering today Brazil’s puzzling increase in medium income. The rise of bankruptcies. And Petrobras’ plan for the post-pandemic world.

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What is happening to Brazil’s average income?

Economic crisis, high unemployment rates (with even bigger levels of labor underutilization), and an uptick in bankruptcies. All of these factors are likely to indicate a massive fall in workers’ average income. That is what happened during the 2014-2016 crisis. [restricted]However, as the chart below shows, in 2020 the opposite has been observed. With the coronavirus crisis, workers’ average income has abruptly increased.

How to explain. Economist Daniel Duque, of think tank Fundação Getulio Vargas, says there are multiple hypotheses to explain this highly counterintuitive trend.

  • Composition effect. As we showed in yesterday’s Weekly Report, the crisis has shut down more low-paying jobs — which usually comprise tasks that don’t allow for remote work. Also, this crisis has been particularly harsh on informal workers — which earn less money than their formal counterparts. By reducing the universe of low-paying workers, the data could be skewed upwards.
  • Survey issues. The pandemic has forced the Brazilian Institute of Geography and Statistics to abandon its traditional survey methods of in-person interviews, for an exclusively phone-based survey. That could alter the data, as lower-income people are less connected than high-income populations. During the 2018 presidential race, we discussed how telephone polls can over-represent rich population strata.

Why it matters. Mr. Duque’s research is yet another piece of evidence showing that the true effects are yet unknown — which hampers the country’s ability to weather the crisis.

… Meanwhile, bankruptcies skyrocket in Brazil

After nearly five months since the coronavirus was first spotted in Brazil, the country is observing a worrisome — yet predictable — spike in bankruptcies and filings for administration. In June, the number of companies requesting court-supervised reorganization jumped 44 percent, and bankruptcy adjudications rose 71 percent, according to credit consultancy firm Boa Vista. The worst part is that this is just the beginning. Back in March, we warned that, after hospitals, bankruptcy courts would be the next public service overburdened due to the pandemic.

Why it matters. The number of bankruptcy filings and administration requests was trending downward — but the coronavirus crisis kicked them back up.

Solidarity. For some experts, the surging numbers are still low, considering the size of the crisis. This may be explained by the fact that creditors have become more open to negotiating before enforcing debts in courts.

What’s next? Economists say it remains uncertain how sectors will escape the crisis. Nobody knows how long it will take for the economy to recover to pre-pandemic levels — and some industries will feel a harder blow. That should be the case of the entertainment, tourism, and food sectors, as consumers are likely to be wary to engage in these services until there is a vaccine or effective medication against Covid-19.

Petrobras’ pandemic strategy

The pandemic has accelerated downsizing plans for Petrobras, Brazil’s state-controlled oil and gas giant. The company will continue its move towards focusing its efforts on oil extraction from deepwater pre-salt layers — following other industry giants, which concentrated on more profitable activities.

  • The company plans to reduce its staff by 34 percent, close nine commercial buildings, and place half of its administrative team on remote work regimes. Petrobras also plans to sell USD 27 billion in assets by 2023 — though the crisis could make this plan all but a longshot.

Why it matters. Petrobras’ moves will deeply affect entire chains of suppliers and several locations where the economy revolves around the company. In Rio’s city center, for instance, merchants say the oil company’s remote work system has impacted their sales.

Process. This downsizing process started after Operation Car Wash revealed a systemic corruption scheme within the company — which bled its resources and pushed it to the brink of collapse. Over the past decade, Petrobras has lost around 20 percent of its market value.

Oil crisis. In the short term, Petrobras could revitalize smaller oil fields, which require smaller investments. However, even cheaper solutions are daunting in the pandemic world. Oil prices have plummeted in 2020 — Brent spot contracts fell from USD 67 to 42. Consultancy Wood Mackenzie predicts a drop of up to 30 percent in investments in Brazil’s oil industry.

What else you need to know today

  • Fintech. JPMorgan has reportedly invested in Brazilian fintech Fitbank, its first move into the payments industry in Latin America. The amount of the investment, however, has not been disclosed. Founded in 2015, Fitbank has developed a “white label” platform for payment management — which several financial institutions can offer to their own customers using their brand, not Fitbank’s. So far, the service has reached 96 clients and 180,000 accounts, dealing with around BRL 1 billion per month.
  • Pensions. According to the Economy Ministry, only 13 of 27 Brazilian states have passed a pension reform of their own. Back in 2019, the government unsuccessfully tried to include state- and municipal-level servants to the federal reform, but lawmakers blocked the move. Pensions and benefits are gobbling up major chunks of local administration’s budgets but altering these rules is a popularity risk for governors. The Economy Ministry rated each state’s pension situation from A to D — and 20 states got the bottom scores.
  • Tech. During a webcast on Monday, Central Bank director João Manoel Pinho de Mello said the country must adapt banking regulations for the entrance of big tech companies to ensure competition. In June, the bank issued a ruling saying it could require players to receive prior approval to operate in payments — and blocked newly-launched WhatsApp Pay. Mr. Mello says tech giants already start big as they have millions of users, which could create an imbalance in their relationship with merchants.
  • Environment. The government has dismissed the head of earth observation at the National Institute of Space Research (Inpe). On Friday, official data showed that deforestation has increased for the 14th straight month in Brazil, up 25 percent in the first half of 2020 when compared to 2019 levels. The move is reminiscent of last year’s firing of Inpe’s top official following the release of data showing worsening deforestation — which angered President Jair Bolsonaro and led the government itself to challenge the quality of the data. 
  • Military v. Supreme Court. The tension between the branches of power in Brazil was taken to a new level after Supreme Court Justice Gilmar Mendes criticized the Armed Forces for its role in the Health Ministry — controlled by military officers for the past two months. “The Army is associating itself with this genocide,” said Justice Mendes, about the sheer number of Covid-19 deaths in Brazil (72,833 so far). Defense Minister Fernando Azevedo e Silva promised to sue.[/restricted]


New study to measure effects of pandemic on Brazilian businesses

The Brazilian Institute of Geography and Statistics launched a new research project to measure the effects of the Covid-19 pandemic on Brazilian businesses. The idea is to gather information on sales, payment capacity, the number of employees, and other such indicators to help to understand what policy measures can help minimize support companies moving forward.

Dubbed “Business Pulse,” the project will survey around 2,000 companies across all regions of Brazil. The first results will be released on July 16.

Our July 9 Daily Briefing explained how Brazil has produced promising economic data as businesses began reopening. However, these numbers are more likely to be false dawn than an actual uptick in the fortunes of the Brazilian economy.

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Latin America

Chile president sees popularity tumble after quarantine gaffes

In pandemic times, a quick trip to buy a bottle of wine has the potential to spark a national crisis. That’s what happened to Chilean President Sebastián Piñera, who was caught breaking quarantine alongside his security team to shop at an exclusive wine store. Worse than the act itself, Mr. Piñera’s indiscretion occurred while Chile faces the worst stage of its Covid-19 epidemic, with an average of almost 5,000 new cases every 24 hours.

And this is not the first time the president has been caught breaking social isolation rules. On June 24, Mr. Piñera was criticized for attending his uncle’s funeral, which had 30 people in attendance, exceeding the maximum limit of 20. The optics of the event were worsened by the wake ceremony after the service, which included live music.[restricted]

More than a slip, the two recent controversies followed a series of government conduct that has caused public outrage, such as the resignation of Health Minister Jaime Manalich. Two weeks ago, the head of Chilean health stepped down after an independent report proved the country had over 5,000 Covid-19 deaths, not the 2,000 Mr. Manalich had officially reported. 

This distrust and anger toward the government could cause serious consequences for the president, who — we easily forget — had approval ratings of just 9 percent back in January. When the crisis arrived, Mr. Piñera’s administration acted quickly and effectively at first and managed to claw back some scraps of popularity. His image improved and approval ratings hit 29 percent late in May — bad, but much better than 9 percent.

But now that rally appears to have stopped, and the president’s popularity is going down again.

Besides the crisis involving the Health Ministry and the Covid-19 numbers skyrocketing, Chileans have one eye on a constitutional referendum, originally scheduled for October 25 but now postponed. As one of the demands of last year’s anti-government protests, the vote will allow Chile to decide whether or not it wants to form a new constituent assembly, reforming the laws of the land. 

Chile after Sebastián Piñera

If President Piñera manages to complete his term, he will only pass the presidential sash on to his successor in 2022. Since 2006, this hasn’t been a problem for political leaguers from any side of the aisle. Mr. Piñera first won in 2010, succeeding center-left president Michele Bachelet. In 2014, Ms. Bachelet won again, before passing the torch on to Mr. Piñera a second time in 2018. 

This alternation of power has been Chile’s ‘secret’ to maintaining its institutional balance ever since the end of General Augusto Pinochet’s bloody military regime. But this could change, as the moderate right-wing represented by Sebastián Piñera seems to be weakened by the latest events. Meanwhile, the left-wing doesn’t have a successor with the same pull as Ms. Bachelet, who is now leading the United Nations High Commission for Human Rights. 

Chilean documentary filmmaker Carola Fuentes, director of “Chicago Boys” told The Brazilian Report that there is no reason for panic. Though there is “always a possibility for reactionary movements”, Chile tends to lean toward social-democracy.

“It seems to me that there is a certain awareness, borne onto the general population and that can mark the change in the constitution in October, those social-democratic ideas can be imposed on the possible emergence of extremist ideas,” Ms. Fuentes said. 

The human rights abuses to which Mr. Piñera’s administration subjected his own population — which led to a United Nations’ report about the case — would by itself make 2020 a difficult road to ride for the president. With the pandemic, every single mistake has turned into another reason to blame the government. 

“It is true that this government has already faced the pandemic with image problems, with low confidence levels, which makes it difficult for any authority to work. But that doesn’t hide the fact that health decisions were confusing, contradictory, from the beginning, with hidden and inaccurate information [which led the resignation of Minister Mañalich],” added Ms. Fuentes.[/restricted]