BRASILIA, (Reuters) – Brazil’s President Dilma Rousseff announced yesterday an increase of nearly a fifth on financial aid under a flagship social welfare program, after implementing a series of austerity measures in recent weeks.
The move, which she announced during a trip to the northeastern state of Bahia, is likely to be seized on by critics as a sign that her commitment is wavering on budget cuts needed to cool the economy and stamp out inflation.
Rousseff, who pledged after winning last October’s election to eradicate extreme poverty in Latin America’s largest economy, said financial aid under the Bolsa Familia program would rise by an average of 19 percent.
“A wealthy nation is a nation without indigence,” she said, repeating one of her campaign slogans.
It follows the announcement on Monday of 50 billion reais ($30 billion) worth of budget cuts, including cuts to a low-income housing program and a freeze on hiring civil servants [ID:nN28242976].
This month, her coalition in Congress blocked union demands for a larger hike in the monthly minimum wage.
Despite years of economic growth that has helped more than 20 million people rise into the middle class, Brazil still has one of the world’s largest gaps between rich and poor with millions of people surviving on just a few dollars a day. The Bolsa Familia program, which was vastly expanded by former President Luiz Inacio Lula da Silva, has played a vital role in eradicating poverty by linking children’s school attendance to a monthly family stipend.
Critics say yesterday’s announcement, which will cost the government more than 2 billion reais, could signal backsliding on the budget cuts. In response to pressure from labor unions, the government also will adjust income tax brackets to help boost families’ spending ability. That will cost it another 2 billion reais.
