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Will Bolsonaro’s spending spree leave any winners?

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Brazil
Politics
Jair Bolsonaro holds his hand up, pointing. He wears a blue shirt and a black glove. He is above a crowd of people holding up hands or their mobile phones to take photos.
Photo by Palácio do Planalto, published under a CC BY 2.0 license

Brazil is considered one of the world’s breadbaskets. Yet, the number of people who don’t have enough to eat has increased from 19 million to 33 million in the last two years, according to the Brazilian Research Network on Food and Nutrition Sovereignty and Security. Annual inflation has remained above 12 per cent for months. But inflation rates for food have hit almost 30 per cent. All while workers’ wages keep falling.

It’s no surprise that the hot issue of the 2022 presidential election in October is the cost of just being able to live. Many Brazilians blame the economic malaise on the Jair Bolsonaro administration’s mistakes and lack of action.

Bolsonaro and his allies in Congress had been ignoring demands to guarantee food security. But when the former President Luiz Inácio Lula da Silva took the lead in polls for a sustained period of time, they woke up. Barely three months before the election a package of direct cash handouts (totalling $7.9 billion) was announced for struggling Brazilians. The move was seen as a violation of electoral legislation and played fast and loose with the country’s fiscal rules – a constitutional amendment was needed to make the bill feasible. It’s been called the the ‘Despair Amendment’ and the ‘Vote-Buying Amendment’.

Hitherto Bolsonaro’s strategy towards working-class families had been quite different. While Lula was reminding them of easier access to ‘barbecues and beer’ during his administration (2003-10), Bolsonaro had played the ‘upholder of morals’ card. For example, he harshly attacked an abortion undergone by an 11-year-old girl who had become pregnant after being raped.

There is a part of the public attracted both by the material security they experienced under Lula and by Bolsonaro’s discourse on family and religion. The ideal President for them is someone who can merge the former’s ‘care for the poor’ with the ‘values’ propounded to exhaustion by the latter.

Since that is not possible, erosion of their purchasing power has spoken louder – until now. Because those who used to eat beef now eat chicken, which is cheaper. And those who ate chicken now live on eggs. And whoever used to eat eggs now goes to bed hungry.

The problem is that Bolsonaro’s pre-election cash handouts – ignoring fiscal rules and spending money that doesn’t exist – have set economic timebombs that will explode in 2023. Had the measures been planned in advance rather than as an opportunistic response, they might not have created such a gigantic problem in public accounts. However, they will only spur higher interest and inflation rates, making job creation even more difficult.

Meanwhile, the Bolsonaro administration, which has always sold itself as honest and upstanding, is beset by allegations of corruption.

It is worth remembering that, in 2006, Lula was re-elected President despite also facing serious allegations of corruption, because the economy was doing well. This time around, nothing indicates that the poorest will see any medium-term economic uplift. And with the fiscal powder keg set to explode, it looks like 2023 will be a very bad year in Brazil, no matter who wins.

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