Bolsonaro Says He Can’t Extend Covid Cash Handouts in Brazil

Brazil President Jair Bolsonaro said his government cannot keep giving emergency aid to informal workers indefinitely, signaling policy makers don’t intend to extend the benefit that expires at year-end.

“Some people want to perpetuate social benefits, but nobody lives like that,” he said on Tuesday during a speech at the Itaipu power dam with Paraguay President Mario Abdo Benitez. “We need to have the courage to make decisions; worse than a poorly-made decision is indecision.”

Brazil will return to the Bolsa Familia program begun by former President Luiz Inacio Lula da Silva once the pandemic-related aid expires, said a person from the country’s economic team who asked not to be named because the discussions are private.

Latin America’s biggest nation has spent billions of dollars on emergency stimulus including monthly stipends amid a devastating coronavirus outbreak. While those measures have helped to steady consumer demand, investors are fretting over how the government will pay for them. With public debt nearing 100% of gross domestic product this year, Bolsonaro’s comments provided some relief to markets, boosting the real.

Bolsonaro Says He Can’t Extend Covid Cash Handouts in Brazil

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The Brazilian currency rose as much as 1.7% to 5.266 per dollar in late morning, leading gains in emerging markets. It is still among the worst performers among 24 emerging-market currencies this year, after the Turkish lira and the Argentine peso.

Economy Minister Paulo Guedes and central bank President Roberto Campos Neto have repeatedly urged the government to return to fiscal austerity to secure investor confidence.

Several cost-cutting proposals have been introduced to congress but have so far made little progress as lawmakers were focused on last month’s municipal elections and now on who will preside both houses of congress next year.

Bolsonaro’s popularity was boosted during the past few months by the cash handouts, but that didn’t translate into political gains in the local elections. All of the mayoral candidates that Bolsonaro supported were defeated.

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