The end of Emergency Aid and the creation of Auxílio Brasil, as a substitute for the Bolsa Família program, could change consumer relations in Brazil and contract the economy. This must occur mainly due to the drop in the number of beneficiaries. Almost 40 million people were assisted by Emergency Aid and only 14 million receive Bolsa Família.
According to a survey by ProScore, an information technology company, more than 22 million Brazilians will no longer receive government funds as of this month, November 2021. Auxílio Brasil should serve a group of 17 million Brazilians by the end of the year, according to the Government Federal.
Even with the expansion of beneficiaries that should happen with Auxílio Brasil, the reduction in the circulation of resources in the market is sudden. Not even the 17.84% readjustment in relation to Bolsa Família, reaching the minimum value of R$ 217.18, will compensate for this change.
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The survey also identified a change in the consumption profile of beneficiaries. Emergency Aid put more money in the hands of the male public, as around 44% of those assisted are men. In the case of Bolsa Família, now Auxílio Brasil, women make up 90% of the group served, according to data from proScore, from May to July 2021.
The migration of programs will not, however, change the regions where resources will be directed. In the case of the former Bolsa Família, 10% of all beneficiaries were in Bahia, São Paulo, Pernambuco, Ceará and Minas Gerais, in the period calculated. Among the citizens who received Emergency Aid, the group remains the same, exchanging only Ceará for Rio de Janeiro.
“What we are going to observe with this data is a change in the consumption pattern that could be important for the market. It is not only the fact that men are the group that will lose the most money by cutting resources, but also the population that receives it is most deprived and has social urgencies that do not drive the market”, explained Mellissa Penteado, CEO proScore.
For Mellissa, another important point is to understand where the resources will be generated or reallocated for the program to exist. Professor of Economics at Universidade Presbiteriana Mackenzie Josilmar Cordenonssi also points out that without a secure source of financing, within the Spending Ceiling, this movement could impact inflation and affect Brazil’s credibility in the international market.
Impact on the economy
According to Cordenonssi, the new program should not impact the Gross Domestic Product (GDP) in general. The difference must be felt more strongly in the periphery and poorer places. “I think the Senate’s proposal for the project is better than the government’s. The project’s problem is to finance this with the default of court orders that must be paid. I believe that court orders should be outside the spending ceiling as the government has no way of controlling when these actions will be decided”, he adds.
As for the doctor in economics, professor and researcher at Cedeplar/UFMG, Débora Freire, the transfers have the impact of maintaining a minimum consumption capacity for millions of families. However, the decrease in the number of people served will have a significant negative consumption shock to the economy.
“We lost the consumption capacity of an important part of the population, which is negatively reflected in the production of the sectors and, consequently, in employment and in the income generated. We even lost revenue for the government, since most of our taxation is on consumption and, with the drop in consumption, what is collected on this base also drops”, he exemplifies.
program expansion
“Bolsa Família is more a humanitarian issue than an economic one. It is necessary to give support to these families to prevent the increase in poverty in the country and social instability with robberies. The project has to be a State policy and not a government policy. The Renda Cidadã project may be the measure that will permanently establish this”, says Cordenonssi.
The UFMG specialist warns that the ideal would be a program that encompasses the poorest 30%, around 28 million families. But more important than the number of families is the design of the program. “Given our delicate fiscal situation, it is necessary to propose structural solutions for financing a more robust and permanent program, not just for the cyclical ones. The way to do this is to act on the problems and regressions that we have in the tax system”, he says.
Regarding the amount of R$ 400, Débora emphasizes that the political impasse is very bad, as a program that would serve to bring security to vulnerable families has turned into a well of insecurity. “Today you can’t do much with R$400, especially when we consider the inflation that plagues us. However, given our delicate fiscal situation, and even the comparison with the benefit prior to the pandemic, R$400 is an adequate amount”, he adds.
How is the person receiving Emergency Assistance?
Beneficiaries of Emergency Assistance can be relocated to Auxílio Brasil as long as they are included in the pre-established requirements. As the Emergency Aid was a transitional subsidy program due to the economic sensitivity brought about by the pandemic and the consequences of the lockdown, Mellissa explains that the public ends up being different, since the aid also included self-employed professionals and service providers who had their generation of compromised income.
“In this first month, Auxílio Brasil will be destined only to families that were part of Bolsa Família and that in October 2021 were considered eligible for the benefit. The amount of Brazil Aid will vary. The increase of almost 20% raised the average benefit to R$224.41 in November. Until then, the average Bolsa Família ticket was around R$190”, completes the CEO.
For Cordenonssi, the informal economy is absorbing the labor that was served by Emergency Aid. However, this is not the reality of the Northeast, for example. The doctor in economics Débora Freire, endorses that not all beneficiaries of Emergency Aid will follow the new program.
“In October this year, 39.4 million families were receiving Emergency Assistance. Adding to those that were from Bolsa Família, we had 44 million families receiving some kind of aid. As of November, only 14.5 million families, which are those who were already on Bolsa Família, will receive Brazil Aid. We have 29.4 million families excluded from any social protection via income transfer”, says Débora.
New rules
This Thursday (25), the Chamber of Deputies approved the basic text that creates the Auxílio Brasil and Alimenta Brasil programs. The measure’s rapporteur, Deputy Marcelo Aro, changed the text sent by the Executive with regard to the income of families that may receive the values of the new program.
In the new text, families in poverty, whose monthly per capita family income is between R$ 105.01 and R$ 210, are eligible for the Auxílio Brasil program; and families in situations of extreme poverty, with monthly per capita family income equal to or less than R$ 105. These values are higher than initially forecast by the government.
In addition, to participate in the program, families must meet requirements such as prenatal care, compliance with the national vaccination calendar, monitoring of nutritional status and minimum school attendance. The change is seen in a positive way by specialists who questioned the lack of rules in the new program, as existed in Bolsa Família.
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