Brazil’s Guedes says calamity decree could make room for higher welfare program in 2023
2022.09.01 19:30
FILE PHOTO: Brazil’s Economy Minister Paulo Guedes walks before a national flag hoisting ceremony in front of Alvorada Palace in Brasilia, Brazil, March 17, 2022. REUTERS/Adriano Machado/File Photo
RIO DE JANEIRO (Reuters) -Brazilian Economy Minister Paulo Guedes said on Thursday that the continuation of the Ukraine war could make the government sign a calamity decree, which would make room for a higher welfare program in 2023.
The maintenance of 600 reais ($114.88) monthly payments under the Auxílio Brasil program is one of the main promises of President Jair Bolsonaro in his quest for reelection in October, while he trails former president Luiz Inácio Lula da Silva in opinion polls.
But in next year’s budget bill, the government reduced cash handouts to 400 reais because keeping the current level would require circumventing the spending cap rule, and there is no legal provision for this so far.
Speaking at an event hosted by Sebrae, which promotes the competitiveness of small businesses, Guedes said that a calamity decree could be signed if the war in Eastern Europe continued.
During the pandemic, the state of calamity made it possible for extraordinary expenses to be made without having to comply with the spending cap rule.
The minister stated that taxing the “super rich” could finance the increase in the welfare program, adding that the payment of 600 reais next year is “guaranteed.”
Guedes predicted the company’s gross debt would fall to 76.6% of gross domestic product after the development bank BNDES returns 90 billion reais ($17.26 billion) it owes the Treasury, which he said would happen soon.
Guedes also said the Federal Reserve is in talks with the Brazilian central bank to implement Pix instant payment system in the United States.
Launched in November 2020, Pix is free of charge for individuals but policymakers allow banks and payment institutions to freely define costs for merchants, both for transfers and receiving funds.
Its massive adhesion by Brazilians made it surpass the level of transactions with credit and debit cards in the country.
($1 = 5.2130 reais)
($1 = 5.2227 reais)
(Reporting Rodrigo Viga Gaier, Writing by Marcela Ayres; Editing by Steven Grattan)
