PFM Solutions for Emergency Cash Transfers in Brazil

Posted by Felipe Bardella and Pedro Jucá Maciel[1]

According to the ILO,[2] current lockdown measures to fight the spread of COVID-19 have affected around 80 percent of the world’s workforce, hitting especially hard informal workers with no access to health and social protection services.

Countries have responded to this challenge with a wide range of measures to support households and firms, including boosting unemployment and social security benefits and strengthening conditional cash-transfer programs to low-income families. However, there are many countries in which a large part of the population, especially informal workers, falls outside existing social safety nets.

In Brazil, a major cash-transfer program called Bolsa Família has been in place since the early 2000s, supporting around 14 million families and 43 million people (around one fifth of Brazilian population). However, some 40 million people are not covered by this program and depend on the informal sector to survive.

From a PFM perspective, transferring cash to eligible beneficiaries via individual bank accounts and/or prepaid debit cards is likely to be the most timely and secure method of payment, besides strengthening financial inclusion. Bolsa Familia payments are processed in this way by the large state-owned commercial bank Caixa Econômica. The federal Treasury makes a bulk transfer to the bank that distributes the corresponding amounts to final beneficiaries. There is complete traceability of payments in the government financial management system, and information on beneficiaries and amounts received is published with full transparency in a Transparency Portal.[3]

The eligibility criteria are checked against the government's single registry for social programs (CadUnico). This registry is shared by the federal government, states and municipalities, and contains information such as a beneficiary’s personal identification number, family composition, type of the residence, education, work situation and income level, among others. Since 2003, the CadUnico has become the main instrument for the selection and inclusion of low-income families in federal programs, including Bolsa Família benefits. Caixa Econômica manages the registry.

On April 2nd, the Brazilian Parliament passed Law 13.982/2020 that created a temporary emergency cash transfer program for low-income families. The law is mainly targeted at informal workers who are at the margin of the current social safety net and conditional cash-transfer program. Some Bolsa Familia beneficiaries will also benefit from the new scheme. It is estimated that 54 million people are eligible to receive a monthly cash payment of R$ 600 (US$ 120 or half of the current minimum wage), but only about one-fifth of them are currently registered in CadUnico.

The challenge is how to operationalize such payments given that most of the eligible beneficiaries are not covered by CadUnico or any other registry. To meet this challenge the government has announced an ambitious initiative to register around 40 million people, provide them with electronic bank accounts, and disburse the emergency benefits in a very short timeframe. The main steps are as follows:

Implementation of the scheme began on April 6th and within five days 31 million people had applied for the benefit, of which 40 percent chose to set up a new saving account. Payments started in April 9th and will continue throughout the month. Besides providing vital relief for numerous families, the program brings wider benefits. For example, the new database of the informal sector will help the government design and implement other policy instruments targeted at poor and vulnerable groups. It will also enhance financial inclusion for low-income informal workers, and give them the possibility of future access to credit markets.

The COVID19 pandemic required prompt and effective responses from the public sector. The emergency cash transfer program is already providing immediate financial relief to low-income families while also creating opportunities for longer-term policy interventions.[4] More important, the Brazilian experience stands as a valuable example of how PFM systems can be adapted to deliver cash transfers efficiently and rapidly to the intended beneficiaries, including those in the informal sector.

This article is part of a series related to the Coronavirus Crisis. All of our articles covering the topic can be found on our PFM Blog Coronavirus Articles page.


[1] Felipe Bardella is a Technical Assistance Advisor at Fiscal Affairs Department, IMF; Pedro Jucá Maciel is Undersecretary for Fiscal Planning at the Brazilian National Treasury.

[2] ILO Monitor 2nd edition: COVID-19 and the World of Work.


[4] The fiscal cost of the program is R$ 98 billion (1.3 percent of GDP)

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.