Bolsonaro’s Addiction to Covid Cash Could Make Brazil Go Bust
The president’s populist push already has some investors smelling fiscal disaster.
Diverging fiscal paths.
Photographer: Andre Borges/Getty Images South America
Latin America responded ambitiously, if not always efficiently, to the coronavirus pandemic, with many countries spreading cash, credit and tax deferrals to vulnerable companies and households. The emergency stimulus has injected bountiful resources into listing economies — 12% of gross domestic product for Peru, 18% in Brazil, 5% in Argentina — and helped those who were already struggling as well as 45 million more at risk of falling back into poverty. It has reduced job losses, eased income inequality and avoided even more calamitous falls in markets and wellbeing.
But as this year’s crash turns into a sick post-pandemic recovery, the emergency largesse has created a dilemma for several governments. How to wean nations from spending that has been a social blessing but could end up a fiscal curse?