Rising public spending and interest rate increases will likely exacerbate Brazil’s long-standing economic problems, leading to stagflation, growing inequality and greater vulnerability to shocks. On Oct. 21, Brazilian President Jair Bolsonaro announced that his government would move forward with a new cash-transfer program, called Auxilio Brasil, which will likely put Brasilia over the constitutionally-mandated spending cap. Bolsonaro’s allies in Congress are likely to push for a temporary rise of the constitutional spending limit and spacing out a series of recently court-ordered outlays, which currently total $15 million. Bolsonaro and his allies hope the Auxilio Brasil program will bolster domestic support ahead of the October 2022 general election. ...
