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Bolsonaro’s economic populism

Bolsonaro introduced right-wing populism in Latin America. As a typical populist, he refuses to face concrete problems, changes his position to the taste of public opinion and promises unfeasible achievements. The problem is that, with this, the president risks sinking the country into crisis, especially in relation to the sustainability of public accounts, a major challenge of the Brazilian economy.

The excessive use of the term “populism” generates controversy.  There is much criticism of its indiscriminate application to leaders who escape the standard, usually left-wing politicians. Right-wing populism is new in Latin America and, therefore, causes discomfort when comparing the extreme right-wing Bolsonario and leftists like Chávez, Evo Morales and Cristina Kirchner.

populists govern as if they were in an eternal electoral campaign, proposing inconsistent and financially unsustainable public policies.

However, the concept of “populism” may be pertinent, as long as it is applied with criteria. A good definition is that populists govern as if they were in an eternal electoral campaign, proposing inconsistent and financially unsustainable public policies. From this point of view, Bolsonaro is a reference of populism, especially when it comes to economics.

In his long legislative career, Bolsonaro has always been a staunch defender of statist nationalism promoted during the military regime that ruled Brazil between 1964 and 1984. True to this principle, he consistently voted against liberalizing measures such as privatizing state-owned companies and reforming the costly national welfare system.

As if by magic, Bolsonaro became a liberal in the 2018 elections. The candidate understood that he would take advantage by presenting himself as the national champion of the anti-PT cause, taking advantage of the strong rejection of former presidents Lula and Dilma Rousseff. The change was surprising. Bolsonaro is a fierce critic of the social agenda of the petitioners, whom he understands as degenerate communists. However, in economics he approached the initiatives of the party, whose notoriously spendthrift and nationalist administrations led the country to the fiscal crisis in which we found ourselves five years ago.

The liberal metamorphosis of the Bolsonario became credible when the candidate joined current economics minister Paulo Guedes, a PhD in Chicago and former financial market trader. During the campaign, Guedes promised to solve the fiscal problem left by the PT in an aggressive privatization program. The sale of public assets would generate “trillions” of reais with which the fiscal deficit would quickly be zeroed.

After two years of government, privatizations have yet to materialize.

After two years of government, privatizations have yet to materialize. Public accounts remained in the red until the pandemic made them substantially worse: by 2020, the nominal deficit is projected to be 12% of GDP and the debt-to-GDP ratio will reach 93%. It is a fact that COVID-19 was the main responsible for the deterioration of public accounts this year. But even before the onset of the disease it was clear that the trillions of Guedes and the liberalism of Bolsonaro were nothing more than chimeras.

Guedes demoralized himself once and for all when General Braga Neto, Head of the Civil House, launched the Pró-Brasil program, a letter of intent whose objective is to increase public investments.  Pró-Brasil was launched in the middle of a pandemic, which unveiled the dichotomy in economic policy that exists within a brainless government. While Guedes declared that destabilizing reforms would counterbalance the recession that was to come, Braga Neto presented diametrically opposed solutions.

And Bolsonaro? While his team was struggling in the first half of 2020, the president seemed to pay no attention to the urgent problems the country was going through. As a good populist, he refused to present concrete measures to deal with the health calamity, trying to avoid the political costs that inevitably arise in crisis management. The president minimized the virus and attacked the social distancing measures imposed by mayors and governors.

Bolsonaro was finally forced to act when Congress and the government negotiated the implementation of emergency aid to sustain the income of vulnerable workers whose livelihood was tending to disappear with the pandemic. The government’s economic team proposed temporary aid of R$200 per month, an amount considered low by the opposition. Under the leadership of Rodrigo Maia, president of the Chamber of Deputies, Congress approved a grant of R$400.

Maia represents the traditional right and sometimes presents himself as an opponent of Bolsonaro. Therefore, the approval of the 400 reals was a political setback for the president, whose reaction was quick: with the support of left-wing parties, his government increased the aid to R$600. This figure was reached without any feasibility or cost and benefit studies.

The populism of Bolsonaro resulted in the continent’s largest income support program in times of pandemic

The populism of Bolsonaro resulted in the continent’s largest income support program in times of pandemic, which will make the Brazilian recession in 2020 relatively mild. But the cost of emergency aid will be no less than R$322 billion, equivalent to almost 5% of GDP. Per month, spending on the “corona vaucher” is greater than the successful Bolsa Família all year round.

However, the political effects of the emergency aid were remarkable. The program has conditioned the government’s increase in popularity: according to Datafolha, the optimal or good rating rose from 32% to 37% between June and August 2020. This increase was substantial in the Northeast, until now a stronghold of the PT, where most of Brazil’s poor population is concentrated.

With an eye on the November municipal elections, Bolsonaro maintained emergency aid until December, reducing it to R$300 in the last two months. The government continued to spend much despite the reopening of trade and the momentary cooling of the pandemic during the second half of the year. With the plea already finalized, the aid will apparently end, even with signs that the country is about to enter a second wave of COVID-19. In other words, the populist policy and not the pandemic seems to determine emergency aid.

It remains to be seen what will happen next year. With the political game already dictated by the 2022 general elections, the government will most likely throw away its liberal agenda and refuse to cut spending. In the wake of these indecisions and miscarriages, public accounts deteriorate, along with the health of the population. The president’s inability to make difficult decisions increases the risk of a return to inflation and an explosion of public debt.

Populists are short-sighted and inconsistent; their unsustainable policies cause crises that can ruin countries. This was the case in the Argentina of Perón and the Kirchners, in the Venezuela of Chávez and Maduro and, unfortunately, can happen in Brazil of Bolsonaro. His government puts the sustainability of public accounts and the stability of the Brazilian economy at serious risk.

*Translation from Spanish by Emmanuel Guerisoli

Photo of the Palacio del Planalto at / CC BY


Historiador económico. Profesor de la Escuela de Economía de São Paulo de la Fundación Getulio Vargas (EESP/FGV). Investigador honorario del University College London. Doctor en Historia Económica por la London School of Economics and Political Science.


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