Millions of Brazilians at risk of slipping back into poverty

People look at job listings posted on a light pole in downtown Sao Paulo, Brazil, where the government has recently halved the amount of its monthly cash transfers to Brazil's poor [File: Amanda Perobelli/Reuters]

Many people in Brazil are struggling to cope with less pandemic aid from the government and jumping food prices, with millions expected to slip back into poverty.

Brazil’s government, starting this month, halved the amount of its monthly emergency cash transfers to help Brazil’s poor withstand the hardship of the economic meltdown, down to 300 reais ($54).

As the government winds down the programme through year-end, with unemployment still high, many of those people who benefitted will become newly impoverished, according to Marcelo Neri, director of the social policy centre at the Getulio Vargas Foundation, a university and think-tank. Half of them are expected to fall into poverty in October alone, he said.

The programme, which started in April, has been the main driver behind lifting 15 million people from poverty, including two million from July to August, according to a report the university published on Friday. Poverty, which the FGV defined as income equal to half a minimum monthly salary, or 523 reais ($95), has reached its lowest level since at least the 1970s, according to Neri, the report’s author.

Marcio Santos, 27, used to sell water at traffic lights in Sao Paulo. Nobody wants to buy from him any more, fearing COVID-19 contamination, so he has been relying on the government’s pandemic cash programme. Receiving 300 reais ($54) monthly instead of the 600 reais ($108) he collected for months is blowing a hole in his finances.

“For a family that receives aid of 300 reais, how can we take care of our 5 kids with this? There is no way we can buy milk, diapers, food,” he said.

People walk around the Saara street market, amid the outbreak of the coronavirus outbreak, in Rio de Janeiro, Brazil [File: Pilar Olivares/Reuters]

President Jair Bolsonaro told the United Nations General Assembly last month the pandemic cash programme had buoyed the livelihoods of 65 million Brazilians, making it one of the world’s largest such initiatives. Political analysts have widely attributed the jump in his popularity to the programme’s success. Some 40 percent of Brazilians surveyed by pollster Ibope rate Bolsonaro’s government as good or excellent, according to a poll published September 24.

But the Brazilian government lacks the fiscal space to maintain the costly programme. What remains to be seen is whether Bolsonaro’s approval ratings will tumble as aid is withdrawn.

Meanwhile, rising food prices have also been hurting the poor.

Inflation data that Brazil’s statistics agency released on Friday showed a 2.3 percent jump in food and beverage prices in September, its biggest increase for that month on record since 1994. Food prices have increased 7.3 percent during 2020, with some staples like rice, milk and tomatoes jumping 41 percent, 30 percent and 26 percent, respectively.

Higher food costs are being driven by a weaker exchange rate, boosting Brazil’s exports and reducing domestic supply, according to Pedro Kislanov, who coordinates the statistics agency’s inflation survey. There has also been heightened domestic demand due to the government’s COVID-19 aid programme.

A caregiver for the elderly, Cleide Valente, visits the same Sao Paulo street market every week, and on Thursday she complained about the cost of food.

”(Before the pandemic) I could do a good purchase with 120 reais ($22). Today, I already spent 160 reais ($29) here,” Valente, 57, said.

According to the World Bank, up to 150 million people globally could slip into extreme poverty, living on less than $1.90 a day, by late 2021. The exact amount will depend on how much economies shrink during the COVID-19 pandemic, the bank said in a report on Wednesday.

Source: AP