MercoPress. South Atlantic News Agency

Brazilian project to cut poverty to “developed countries’ level” in six years

Marcio Pochmann believes poverty in Brazil can be reduced but not income distribution

Brazil could achieve social indicators similar to those of developed countries by 2016 if the country is able to maintain the same rate of extreme poverty reduction and income redistribution as recorded during the 2003/2008 period, according to an official report from the Presidential Strategic Affairs Secretariat.

The document elaborated by the Institute of Applied Economic Research (Ipea) considers as extremely poor those who earn up to 25% of one minimum wage per month, whereas the absolutely poor earn up to 50% of one minimum wage per month.

”If we make a projection of the best performances recently recorded in Brazil in terms of poverty and inequality reduction (2003-2008 period) to the year of 2016, the result would be a very positive social outlook. Brazil may virtually overcome the problem of extreme poverty, as well as attain a national absolute poverty rate of only 4%, which means its near-eradication,” the document states.

According to the document, the majority of the progress achieved by Brazil in fighting poverty and inequality is either directly or indirectly related to the structuring of government policies of social intervention, provided for in the 1988 Constitution.

Marcio Pochmann, Ipea president said that the program Bolsa Familia (family basket) together with the increase in the minimum salary and easy access to credit, implemented specially during the last two years, should help to cut the poverty rate from its current 28% to 4%, similar to that of developed countries in six years time.

Nevertheless the project is not so enthusiastic about income distribution. Brazil rates as the second most unequal country in the matter and in the next six years not much is going to happen with the Gini index dropping from 0.54 to 0.48. The Gini index states that the closer to 1, the more unequal income distribution is. In Germany for example the index is 0.26.

“We need more redistribution policies, not only distribution policies”, said Pochmann who demands targets. “In economy we have inflation, primary surplus targets, but nothing of this happens in the social area in Brazil”.

Ipea also points to three other decisive factors to combat poverty and inequality: increased social spending, which went from 19% of GDP in 1990 to 21.9% of the GDP in 2005; decentralization of social policies, with an extended role played by municipalities in the implementation of those policies; as a result their share of social spending rose 53.8% between 1980 and 2008; finally social participation in the formatting and management of social policies.

Porchmann also fingers out as a hurdle the fiscal burden which punishes mostly the low income population. According to Brazil’s Statistics office families making two minimum salaries a month pay up to 48% in indirect and direct taxes, while those making 30 minimum wages, 26.3%. “It’s most unfair”.

According to the Ipea report, institutional consolidation of the framework of social legislation in Brazil would be an important step towards maintaining, in coming years, the fight against poverty and inequality in the country.

But how real is the project. For Antonio David Cattani head of graduate studies at the Rio Grande do Sul Federal University Sociology Department Ipea’s forecast “is not necessarily utopia and could be attainable”.

“But poverty is not only income, but also access to education, health, quality of life, and unfortunately for these issues we still don’t have an official index or targets”, said sociologist Cattani.