World Bank approves loan supporting the expansion of the Bolsa Familia Program

As part of an international effort to mitigate the negative economic effects related to the COVID-19 pandemic, the World Bank Board of Directors approved today the US$1 billion Brazil: Income Support for the Poor affected by COVID-19 project. The program will support the scaling-up of the conditional cash transfer program Bolsa Família, financing transfers to benefit a minimum of 3 million individuals, including minorities.

The novel coronavirus pandemic triggered a global health, economic, and social crisis of unprecedented levels with a major impact on vulnerable populations. Recovery is expected to be gradual and uneven, with millions more families than in pre-COVID-19 time expected to still need support in 2021.

Since the first COVID-19 case was registered in February 26th, the novel coronavirus has infected more than 5 million people in Brazil. As a result, the Brazilian government and the World Bank agreed to build a joint strong response to protect the most vulnerable individuals.

“As soon as the pandemic started, the Brazilian Government implemented a strong policy response to the COVID-19 crisis to provide protection to vulnerable groups. This included important social protection measures, particularly the Emergency Aid. With investments of almost US$60 billion, the program has already made monthly payments to more than 67.8 million Brazilians, assuring a positive direct and indirect impact on the lives of more than 126.5 million Brazilians. As an additional measure to mitigate the effects of the pandemic, the Government decided to expand the Bolsa Família program, adding 1.2 million new families. Therefore, this partnership with the World Bank will allow us to include families that have become temporarily poor or that hadn’t been able to join the program before,” says Onyx Lorenzoni, Ministry of Citizenship.

The COVID-19 pandemic put pressure on the Brazilian economy. In response, the government of Brazil committed to a swift and substantial fiscal stimulus package. These measures are expected to greatly mitigate the impacts of COVID-19 on poverty in 2020, although the poverty outlook for 2021 remains uncertain, as temporary support measures are set to expire, and the labor market remains sluggish. The unemployment rate in August 2020 had reached 13.6 percent.

Before the pandemic, around 13 million families were enrolled in Bolsa Família. The project will finance the Bolsa Familia expansion to extend protection for at least 1.2 million poor families that will be in continued need for support after the end of the emergency cash transfer. Women make up 90 percent of the direct recipients. This expansion will benefit at least 3 million individuals, among them 990,000 children and youth and 7,000 indigenous people.

By promoting such expansion, the project seeks to guarantee economic support to poor families but also mitigates human capital losses. Once enrolled in the program, the families must ensure that their children attend school and have their regular health checkups. This means having the vaccination schedule up to date and seeing the family physician frequently. While the Bolsa Familia conditionalities have been temporarily lifted during the COVID-19 pandemic, they continue to be closely monitored, and will be resumed once the crisis abates.

The World Bank will also provide to the Ministry of Citizenship technical assistance, in coordination with other bilateral donors, to assess the potential impacts of changes in the Bolsa Familia program, help beneficiary families take part of economic recovery, and capture lessons learned on emergency social protection programs in Brazil and globally.

“The uncertainty over the COVID-19 pandemic trajectory and the poverty outlook makes it crucial to expanding the Bolsa Familia program and protect the poor in these hard times. The conditional cash transfer is also critical during the recovery phase, as it encourages families to access health services and ensure that children return to schools, once these services resume. The vast literature on the impacts of Bolsa Familia point to this program’s ability to enhance children’s’ school attendance and to improve several health outcomes. These are key to prevent depletion of human capital, which is the driver of long-run social and economic development,” says Paloma Anós Casero, director for the World Bank in Brazil.

Outcomes supported by the program include:

Maintaining families above the extreme poverty program threshold
Reducing the risks of damage to human capital by monitoring beneficiaries’ school attendance (age 6 to 17 years old) and health checkups
This US$1 billion loan from the International Bank for Reconstruction and Development (IBRD) to the Ministry of Citizenship is guaranteed by the Federative Republic of Brazil and has an average repayment maturity of 7.88 years.