What is happening in Brazil?
1. Politics – The XP/Ipespe poll from Monday (5) indicates that disapproval of Bolsonaro’s administration reached 60%. The index of those who disapprove of the government is 48%. The assessment that the government is “excellent or good” is at 27%, close to the minimum of 25% of last May.
On Wednesday (7), President Jair Bolsonaro and ministers met with businessmen in São Paulo to present the government’s actions to fight the pandemic.
On Thursday (8), the Federal Supreme Court (STF) upheld state and municipal decrees prohibiting in-person services and masses during the pandemic. In another decision, it determined that the Senate should establish a Parliamentary Inquiry Committee (CPI) to investigate the actions of the federal government in the fight against Covid-19. The president of the Senate, Rodrigo Pacheco (DEM-MG), promised to read the request on Tuesday (13). Bolsonaro criticized both STF decisions.
The impasse between the Ministry of Economy and Congress over the adjustments to the 2021 Federal Budget has not yet been resolved. The deadline for presidential sanction is April 22.
2. Economy – The auctions held during Infra Week reached R$10bn (£1.28bn) in investments and R$3.5bn (£440m) in grants. In three days, 28 assets were auctioned, including 22 airports, a stretch of the West-East Integration Railroad and five ports.
The Independent Fiscal Institution (IFI), a Senate’s fiscal watchdog, estimates that the Administrative Reform, if approved with career lengthening, reduction of the starting salary and reduction of the replacement rate, could save, over ten years, up to R$128bn (£16.43bn)for the Union and the States.
3. Public management – The New Gas Law was sanctioned on Friday (9). The law may attract R$381bn in investments over the next ten years and reduce the gas price in the domestic market.
The new Justice Minister, Anderson Torres, replaced the Federal Highway Police and the Federal Police commanders. The Minister of the Environment, Ricardo Salles, exonerated four directors responsible for inspections in Amazonas, Bahia, Paraiba and Tocantins.
[1] £1 = R$7.79
How to read it?
1. The week was unfavourable for the government, but the trend remains neutral. The level of Bolsonaro’s conflict with the STF has intensified, and difficulties with the Legislative have increased. The government’s approval rating has worsened over the past month. As for the coalition, there have been no significant changes.
The CPI installation may wear down the government, corroborating the perception of its flaws in the fight against Covid-19. Concerning the Legislative, the situation is still favourable, but Bolsonaro will have to open up more space in the government. There is pressure on senators to withdraw signatures from the CPI request, and the issue over the budget creates friction in the House.
The government’s approval rating is around 27%. The drop stems from the federal government’s incapacity to manage the pandemic and the perception that Bolsonaro is personally erring in the fight against the pandemic. The president is trying to reverse this perception, but it cannot yet be said that he will be successful in this endeavour.
Bolsonaro has done well to seek support from big business. The group has turned away from the government because of the lack of progress of the liberal agenda and the effects of the pandemic. It is still necessary to wait for the developments of this rapprochement, the relationship with Congress, the effects of the new aid, and how Bolsonaro will behave during this period.
2. Although there are uncertainties regarding the level of government spending and how the 2021 Federal Budget will be balanced, the trend in the economy is still positive. The Brazilian Central Bank is implementing measures to contain the increase in inflation, the emergency aid has begun to be paid, and vaccination has increased the pace.
The auction of concessions reinforced this positive perception last week, showing that the productive sector believes in Brazil in the long term. The direct injection into the government’s cash flow helps in the short term but is less important than the effect that the investments will generate in the economy, such as the creation of jobs and the increase in the country’s productivity. The government would not be able to afford the investments that the private sector will now make.
3. The trend of public administration is still neutral. It takes time to mature to evaluate the effect of recent ministerial changes. The changes in the Ministry of Justice were not well received: the new commanders would have a more political profile, inferring that they would be more prone to accommodations Bolsonaro. Although this may occur, the merit of the changes cannot be taken away yet.
Regarding the Ministry of Environment, the assessment remains negative. The minister is circulating the idea that he first needs US money to only then preserve the environment, an argument that was rebutted by vice-president Hamilton Mourão, president of the Amazon Council. Although Salles’ management is perceived as very negative, it should be noted that a good part of Congress supports him, which may explain his permanence in the government.
Arthur Wittenberg 