A purse with strings

Observations on Brazil

For decades, Brazilian governments have expressed determination to conquer poverty and inequality, and some have spent a lot of money in the attempt. Yet the country's north-east still contains the largest pocket of misery in South America, while its southern metropolises are among the world's most unequal. Luiz Inácio Lula da Silva, the president, thinks he has a plan that will make a difference. It certainly is novel.

Bolsa Família, or "family purse", is a bargain between the state and the poor: the government pays families up to £25 a month in benefits on condition that parents send their children to school instead of making them work. They also take them for regular health checks at government clinics.

This, the government says, will alleviate hardship while preparing the next generation to escape poverty through education. Unlike other social spending, Bolsa Família gets directly to the poorest people, at a relatively low cost.

Families earning less than £25 a month are targeted. So far, 70 per cent of those eligible, or nine million families, have enrolled. School attendance is dramatically up among participating families. All this has cost the state just 0.6 per cent of GDP, compared with the 13 per cent of GDP it spends on its far-from-comprehensive pension system.

The plan's sponsors say Bolsa may help reduce Brazil's gaping inequality. "The money involved is very little in terms of public spending," says Professor Eduardo Cesar Marques of the University of São Paulo. "But it has a huge impact on the families' income - families in São Paulo receiving Bolsa Família receive between a quarter and third of their income from the programme."

The method of delivery is also new. Bolsa recipients use a magnetic card at post offices or banks to receive their money. This bypasses local politicians who have used their control of benefits to buy votes, especially for reactionary parties in the north-east.

The political right is divided between denouncing Bolsa as thinly disguised vote-buying and claiming it is little more than an expansion of programmes it launched before Lula came to power. Critics on the left say it is an attempt to disguise the social cost of a left-wing government persisting with the IMF-approved economic policies of its predecessor.

"It is little more than a palliative," says Professor Plínio Sampaio, a leading left-wing critic. "Every year the government's macroeconomic policies are creating more clients for Bolsa Família."