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UPDATE 2-Brazil's Bolsonaro scraps new welfare plan, economy minister plays down rift

16 Sep 2020 / 01:55 H.

    (Adds Economy Minister reaction, quote)

    BRASILIA, Sept 15 (Reuters) - Brazilian President Jair Bolsonaro on Tuesday said he was scrapping plans to launch a new social welfare program called Renda Brasil, and would instead keep a conditional cash transfer program begun by previous leftist governments.

    Renda Brasil was part of the right-wing leader's plans for his re-election bid in 2022, but Bolsonaro was unable to agree on funding with Economy Minister Paulo Guedes, who is battling to control Brazil's budget deficit.

    "It is forbidden to talk about Renda Brasil in my government until 2022. We will continue with Bolsa Familia and that's it," the president said in a video posted on his social media accounts.

    Bolsa Familia, the successful flagship safety-net program of former Workers Party President Luiz Inacio Lula da Silva, pays women a stipend on the condition that they send their children to school and has been credited with reducing poverty in Brazil. Renda Brasil was set to repackage and fuse it with other welfare programs.

    But Renda Brasil came unstuck over a dispute about how it would be funded, and in particular after members of Guedes' team made it known that pensions and payments for disabled people would be frozen for two years.

    Guedes insisted that he had been misrepresented in the media and that he never called for Renda Brasil to be funded by cutting support for the old, sick and vulnerable. Given these "distorted" headlines, the president's decision was "correct," he said.

    "I'm not a demagogue," Guedes said in an online event hosted by the Brazilian Telecommunications Association. "I will not take from the poorest to introduce Renda Brasil," he said.

    Guedes added that he had called for an end to linking public spending to some form of indexing, and that the government would return to fiscal discipline next year.

    Disagreements over how to fund Renda Brasil meant that it was not included in the 2021 budget proposal sent to Congress last month.

    Separate emergency payments to supplement lost income of poor families and informal sector workers during the coronavirus pandemic have helped raise Bolsonaro's popularity to its highest level since he took office last year, especially in the less developed northeast of Brazil, long a leftist stronghold.

    Bolsonaro has extended the payments until the end of the year but cut them to 300 reais ($57) a month from 600 reais due to fiscal concerns raised by Guedes.

    The president had hoped to roll out Renda Brasil as a way of maintaining support to those currently receiving the emergency pandemic payments.

    But Congress was expected to back Guedes in stopping Bolsonaro from spending on new social programs.

    "Bolsonaro realized that it would be difficult to find fiscal resources for Renda Brasil and it would be hard to get it approved," said Congressman Marcelo Ramos of the Liberal Party. ($1 = 5.2765 reais) (Reporting by Lisandra Paraguassu, Marcela Ayres and Jamie McGeever, writing by Anthony Boadle and Jamie McGeever; Editing by Rosalba O'Brien)

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