President Jair Bolsonaro downplayed the possibility of additional economic aid this year while his economy minister said the pace of vaccinations will be crucial to determine whether vulnerable Brazilians need more financial assistance during a second wave of the pandemic.
“We are not going to let temporary crisis-related measures become permanent spending commitments,” Bolsonaro said in opening remarks at a virtual investors summit hosted by Credit Suisse.
After a multi-billion dollar stimulus package last year, the Bolsonaro administration is trying to steer Latin America’s biggest economy back on the road to fiscal sustainability. But surging Covid-19 cases, including a mutation of the coronavirus in the Brazilian Amazon, has led members of the president’s economic team to privately acknowledge another cash injection may be inevitable.
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On Tuesday, Bolsonaro tried to ease fears that his government was at risk of breaking the nation’s constitutionally mandated spending limit, seen by investors as Brazil’s main fiscal anchor. “We will stay firmly committed to the spending ceiling,” he said.
Speaking at the same event, Economy Minister Paulo Guedes said that additional cash handouts to informal workers would freeze all other public spending, but added that some form of assistance may be needed if rising cases of Covid-19 lead to more unemployment and economic pain.
“Mass vaccination is inspiring and we need to help it happen,” Guedes said. “But if there is a second wave of the pandemic, with some 1,500 or 1,600 deaths a day, we’ll know how to decisively act as we did last year.”
Bolsonaro said that his administration would move forward with long-delayed privatizations this year, and forecast the Brazilian economy would grow by 3.5%.
— With assistance by Martha Viotti Beck
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