Since the Covid-19 pandemic, spending on some of the country’s top social programs have fired, and since then they have been high.
“Brazil still maintains a high contingent of social programs beneficiaries, even with the labor market at historically low unemployment, for some reasons. First, informality is still very high: about 40% of the occupied population is outside the formal regime, which implies low income and labor insecurity,” points out Leonardo Andreoli, an analyst at Hike Capital.
“Second, the programs of the programs were expanded and flexible, which allowed the permanence of families with some income, but still within the established limits,” he concludes.
In an attempt to contain spending and prevent the deterioration of public accounts, the government has aimed mainly in one of these payments: the continued benefit (BPC).
Still, mandatory expenses are still locking over 90% of the budget, and about 70% of them are linked to various benefits. Of the R $ 2.415 trillion in expected expenses for this year, 5% (R $ 121.8 billion) is with BPC.
“The impact is very strong, gives a monumental budget rigidity and takes resources that could be used for investments. Public investment is still down there and this is bad, it is necessary a complementarity between public and private sector efforts,” says Gesner Oliveira, GO Associados and teacher at Getulio Vargas Foundation (FGV).
What draws more attention to the BPC is not even the value by itself, but the contingent of beneficiaries who jumped in the last who, consequently, pulls the value of the final spending up.
In 31 straight months of expansion ,. For the coming decades, the estimate of the Ministry of Social Development is that the.
Considering that the value of the BPC is from a minimum wage, the projection of the cost of the program by 2060 is an increase of 11 times, from R $ 133.4 billion to R $ 1.5 trillion in the period.
In the chart above, there is a jump in the contingent around 2021 and 2022, when the program adherence criteria were expanded. The government had been seeking to contain fraud and beneficiaries who unduly received the BPC, including having vetoed changes that would further flex the benefit. Last Tuesday (17),.
“Something that seems central to me is the continuous improvement of registration and evaluation to remove fraud,” says Guilherme Klein, professor at the Department of Economics at the University of Leeds, and researcher at the Macroeconomic Research Center for Inequalities (Made-USP).
Klein emphasizes the importance of programs like this in a country facing vulnerabilities such as Brazil.
However, in addition to the swelling for misuse of programs, what is discussed is how these projects have faced difficulty in actually promoting the social mobility of their beneficiaries.
“Current programs have generated social protection and are important to relieve poverty. However, more clear departure door mechanisms are lacking, ie, we lack more robust work inclusion programs,” says Laura Müller Machado, teacher and coordinator of the Postgraduate Courses in Public Management at Insper.
“At the present moment, in particular, we could improve the focusing mechanisms of the concession, for example, through municipal quotas to adhere to the program,” he suggests.
Like the BPC, the Bolsa Familia program, the most famous income transfer initiative in the country, also jumped during the pandemic with the flexibility of adhesion rules and.
“This expansion remained after the end of the state of emergency because Bolsonaro realized its positive impact on the economy and popularity. It is worth remembering, however, that the measures were led by Congress and the increase in transfer was against economic policy implemented until then by Minister Paulo Guedes,” says Klein.
For Leonardo Andreoli, from Hike Capital, the benefits, “even if they have a positive impact on poverty and consumption, whether poorly calibrated or without counterparts of productivity and formalization, they can become a source of structural budget rigidity.”
Budgeting the budget is such that the government itself recognized it in the Budgetary Guidelines Bill (PLDO) to 2026. From 2029, according to the projection of the economic team itself, which exhauses the space for investments to be made and so public policies are carried out in addition to the expenses already stamped.
“In Brazil, the idea is always to tie, link, make everything very rigid, which makes public policy management very difficult. However, the demand of society varies with time,” points out José Ronaldo de Castro Souza Jr., chief economist at Leme Consultores and teacher at IBMEC.
“We are coming in one and something needs to be done ,.”
Thus, Gesner Oliveira emphasizes the need to make social programs more efficient, generating output doors to the beneficiaries, and performing a surveillance with greater vigor.
“With the distortions, there is a lot of bottlenecks in spending. The public sector ends that only collects and passes. We have to have a vision of relocating, reducing spending on some items and increasing in others. But this only makes budget flexibility,” concludes Oliveira.
