The week in Brazilian politics. The last brief was dated April 1, from where this report will continue.
- After his speech on Tuesday, where President Bolsonaro seemed to have adopted a more conciliatory tone, he continued to contradict his health minister, Luiz Henrique Mandetta, saying that only risk groups should stay at home. A new poll shows that Mandetta’s popularity has skyrocketed in the last two weeks.
- China cancels orders of ventilators and other equipment essential to combatting COVID-19, apparently to sell them to the higher-paying United States. Brazil will send military aircraft to transport equipment bought in China to make sure that the cargo does not get held up while passing through North America.
- Finance Minister Paulo Guedes expects a higher deficit than the official forecast. A financial aid package to informal workers has been sanctioned by the president, but Guedes hints at more to come.
On Tuesday night, President Bolsonaro made a speech in which, for many observers, it seemed as if he had tempered his tone after appeals from close officials. Previously, Bolsonaro had defended a return to normalcy for everyone except risk groups, such as seniors and people with aggravating diseases — what he called “vertical isolation.” That strategy went against the recommendations of the Ministry of Health, lead by minister Luiz Henrique Mandetta. Members of government such as the vice-president, the finance minister and the justice minister had all expressed support for Health Minister Mandetta, effectively contradicting the president.
In an interview with Rádio Jovem Pan on Thursday, Bolsonaro confirmed that he and the minister had not been getting along well for some time, adding that Mandetta could show “more humility.” The president affirmed that while Mandetta had overstepped, he did not “intend to fire him in the middle of the war,” but warned that “none of my ministers are unfireable.” Mandetta commented that a “doctor doesn’t abandon his patient.”
Opinion researcher Datafolha released a poll on Friday that indicated strong support among the public for the health minister. Since March 20, his approval rating had gone from 55% to 76%, while his disapproval had gone down from 12% to 5%. Bolsonaro saw his approval rise slightly, from 33% to 35%, while his disapproval rate went up from 33% to 39%. 25% found the president’s performance “regular.”
Bolsonaro called a meeting with doctors on Wednesday to talk about the COVID-19 epidemic without inviting Health Minister Mandetta. The doctors told Bolsonaro that it is too early to relax isolation measures, according to the newspaper O Globo. Relaxing them now could risk an outbreak in the coming weeks that would collapse the healthcare system.
While Bolsonaro was being interviewed on Thursday, wanting to see more “humility” from his health minister, Mandetta was in a meeting with the presidents of the Senate and the Chamber of Deputies (the lower chamber of Congress). He left the meeting, which lasted about five hours, with the congressional leaders’ full support. The leaders told him that he is doing a good job and should not leave his post.
Chamber president criticizes
Rodrigo Maia, the president of the Chamber of Deputies, criticized the government for having been slow to react to the crisis, and that its seriousness still had not fully set in. The government’s response lacked “quicker” and “more forceful” action, according to Maia. He made the comments in a webcast sponsored by the financial newspaper Valor Econômico and the Brazilian bank Itaú.
Finance Minister Paulo Guedes, on the other hand, said that in “three or four weeks, we went from zero to more than R$800 billion [almost $150 billion] in resources,” something which had never occurred before. Guedes pointed out that no emerging country had dispatched as high a volume of resources as Brazil.
On Thursday, 48 hours after the Senate passed it, Bolsonaro sanctioned the so-called “corona vouchers” bill that will provide financial support for a three-month period to informal workers and head-of-household mothers. The bill stipulates R$600 ($117) for the former category and R$1,200 ($235) for the latter. The Senate passed the bill in 28 minutes on Monday, subsequently forwarding it to the president for approval.
On Friday, a constitutional amendment — also with a nickname: the “war budget” amendment — was approved in the Chamber of Deputies and will now pass on to the Senate.
The amendment creates a “Crisis Management Committee” that incorporates Bolsonaro’s most important ministers and will be lead by the president himself. The committee will have greater spending powers, but with some congressional oversight in cases of “irregularity” or where limits established in the amendment are exceeded.
The amendment also allows the Central Bank to buy and sell financial instruments directly on secondary markets, which is currently prohibited. According to the proposal, it can only do so with the approval of the Ministry of Finance and the bank’s president will have to report to Congress every 45 days.
A part of the amendment that did not pass was the proposal to reduce public employees’ salaries: with 26% for employees earning between R$6,101 ($141.6) and R$10,000 ($1,871) per month; 30% for those with monthly earnings between R$10,000 and R$20,000 ($3,742); and 50% for those earning more than R$20,000. Money gained from the reductions were meant to be used for combatting COVID-19.
China, supply and demand
It was reported on Friday that 600 ventilators ordered from China and destined for northeastern Brazil, meant for hospitals treating COVID-19 patients, were held at Miami Airport. The Chinese company canceled the order soon thereafter, blaming technical difficulties, and said that the cargo’s destination had changed.
As if to forego speculations, the US Embassy in Brazil tweeted a message saying that the “government of the United States neither bought nor blocked any medical materials or equipment from China destined for Brazil.” On Wednesday, Health Minister Mandetta said that many of Brazil’s COVID-19-related orders had been canceled by Chinese suppliers after the US had offered more money.
Over the last few days, not just Brazil has had confirmed orders suddenly canceled. Countries like Canada and France also had orders canceled by Chinese suppliers, who chose to sell to the US.
Donald Trump sent 20 cargo aircraft to pick up products bought from China. To secure its own orders, Brazil will follow the US example and send military aircraft to transport goods. It is also trying to send executives of large Brazilian corporations, such as the mining multinational Vale, to represent Brazil in China and make sure that the orders come through.
The Ministry of Health has ordered all health professionals, including categories such as veterinarians and dentists, to sign up for medical training to help fight COVID-19. It has also called on medical students to sign up. On Friday, the ministry released a report saying that Brazil has a shortage of personnel trained in areas required to treat COVID-19, such as respiratory physiotherapists and people qualified to operate ventilators.
And the economy
An executive order that allows employers to cut employees’ salaries during the coronavirus crisis went into effect on Wednesday. The order allows employers to cut salaries up to 70%, either through reducing working hours or by suspending the contract. The government will guarantee a corresponding percentage of the employee’s unemployment benefits. If an employee has, for example, R$1000 in unemployment benefits and the employee’s salary is reduced by 70%, the government will guarantee R$700.
On Thursday, an official of the Ministry of the Economy said that the total impact of the financial measures that the government has announced until now amounts to R$224.6 billion (about $42 billion), 2.95% of GDP, which increases the primary deficit estimate for the year to R$419 billion (about $78.4 billion) or 5.55% of GDP.
However, as Valor Econômico wrote on Friday, no one believes in that forecast anymore. Finance Minister Paulo Guedes estimated that the financial measures taken so far to alleviate the crisis amount to R$800 billion (almost $149.7 billion) and might very well increase to R$1 trillion ($187.12 billion).
The newspaper commented that the finance minister did not specify what exactly constituted the estimated sums, thereby contributing “to increased uncertainty, already very high because of the economic effects of the combat against the coronavirus.”
Published on April 5, 2020.