U.S. Markets closed

Brazil’s Bolsonaro, Stuck in Election Race, Plans Bigger Cash Handouts

·2 min read

(Bloomberg) -- President Jair Bolsonaro is considering increasing monthly stipends paid to about 18 million poor Brazilian families as opinion polls show his re-election campaign failing to close the gap with front-runner Luiz Inacio Lula da Silva less than four months before the vote.

Most Read from Bloomberg

The idea is to boost payments made through a cash transfer program known as Auxilio Brasil to 600 reais ($116) from the current 400 reais until year-end, Carlos Portinho, the government leader in the senate, told reporters on Thursday. In order to fund the plan, the administration would abandon a proposal to make up for revenue losses of states that agree to scrap a so-called ICMS tax on items such as diesel and cooking gas, he added.

Soaring fuel prices and inflation running above 11% a year top the list of voter complaints ahead of the October election, with most Brazilians blaming the country’s economic woes on the incumbent. A poll released by Datafolha on Thursday showed Lula would receive 47% of voting intentions in the first round, a 19 percentage-point advantage over Bolsonaro.

Read More: Lula Has 47% in Brazil 1st Round, Bolsonaro Has 28%: Datafolha

Increasing financial aid to the poor would be more effective to reduce the inflation pain, since many state governors are against lowering the ICMS tax, one of their main sources of revenue, Portinho said.

Another measure being considered by the government is giving a monthly aid of 1,000 reais ($192) to about 866,000 self-employed truck drivers and doubling the amount of a gas voucher paid to low-income families until the end of the year.

The measures would bypass Brazil’s spending cap rule, which limits growth of public expenditures to the inflation rate, but Coutinho said this is an “exceptional moment” that justifies doing so.

The economy ministry seeks to limit extra-cap spending to 50 billion reais and calculates that the increase in cash handouts, alone, would cost 22 billion reais.

(Updates third paragraph with numbers from new Datafolha poll)

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.