Brazil’s north faces wider gap with spending freeze
In Salgueiro, a crossroads town in one of the poorest corners of arid northeastern Brazil, Maria Adelaide dos Santos’s small shop selling shoes and clothes springs to life for just a few days at the end of each month. Amid Brazil’s worst recession in a century and a long drought that has crushed hopes of making this an agricultural center, dos Santos survives thanks to a trickle of customers when government employees get paid.
“Unemployment here is very bad and these public servants are all we’ve got now. There are no factories here,” said the 48-yearold mother of three. During a decade-long commodities boom that pushed Brazil’s average yearly growth rate to 4 percent, the country became a poster child in the global fight against poverty.
Heavy spending by the leftist Workers Party government helped lift more than 26 million Brazilians out of poverty - more than a tenth of the population and mostly in the underdeveloped north.
But the collapse of the boom two years ago has hit public coffers and asphyxiated poor towns like Salgueiro. In an effort to tackle Brazil’s bloated deficit, center-right President Michel Temer is now pushing through Congress an unprecedented 20-year limit on federal spending, expected to be approved next month.
In regions like the parched Sert„o of the northeast with scant prospects for private investment, there are growing fears that the cuts could stoke unemployment and worsen the gap between rich and poor in what is already one of the world’s most unequal countries. As in most of Brazil’s least-developed regions, the government here is the main provider not just of education and healthcare but also credit and jobs.
In more than half of Brazil’s 27 states, public sector salaries account for more than one-fifth of economic output. In Brazil’s northernmost states of Roraima and Amap·, in the Amazon, the state accounts for nearly half of the economy while in the southern state of S„o Paulo, Brazil’s richest and most populous, public salaries account for just 10 percent of GDP.
“This spending cap is terrible,” said the mayor of Salgueiro, Marcones LibÛrio de S·. “All of the Northeast is very poor. Many cities are outright bankrupt.”
While pushing ahead with spending cuts, Temer has ruled out reductions in the government’s flagship welfare programs Bolsa FamÌlia, a monthly allowance of up to 336 reais ($100) to impoverished families that won international acclaim for its success in fighting poverty. — Reuters