Brazil’s government requests R$8.3 billion for pensions and R$678 million for BPC in the 2025 budget. Experts believe these figures are underestimated, projecting pension spending to exceed government estimates by R$10 billion to R$20 billion and BPC by R$5 billion. The discrepancies arise from optimistic beneficiary projections and prior underestimations. Critics argue that the current budgetary approach is unreliable.
The Brazilian government is seeking an additional R$8.3 billion for pensions and R$678 million for the Continuous Cash Benefit (BPC) in its 2025 Annual Budget Bill (PLOA). Despite this increase, public finance experts contend that the government’s estimates are still significantly underestimated. Expenditures on pensions and the BPC, designed to aid low-income elderly individuals and disabled persons without Social Security contributions, are exerting considerable pressure on the federal budget due to their growth surpassing Brazil’s fiscal spending cap of 2.5%.
Social Security expert Rogério Nagamine asserts that pension expenditures may be underestimated by R$10 billion to R$20 billion, even post-adjustments made by the economic team. Furthermore, he forecasts a R$5 billion underestimation for the BPC. According to XP Investimentos, pension costs may reach R$1.028 trillion in 2025, which is R$12.5 billion higher than the government’s estimate of R$1.01 trillion. Additionally, XP projects BPC expenses at R$129.8 billion, while the government anticipates only R$119.1 billion. Santander also predicts higher costs, estimating R$1.03 trillion for pensions and R$123 billion for the BPC, surpassing government figures by R$17.5 billion and R$4 billion, respectively.
Sources reveal that adjustments made by the economic team primarily accounted for inflation. When the budget was submitted to Congress in August 2024, the government estimated a 3.9% inflation rate for the official IPCA and 3.65% for the INPC. However, actual figures for the previous year were higher. The IPCA impacts minimum wage adjustments, which in turn influences BPC and pension payments, while the INPC pertains to benefits beyond the minimum wage.
Additionally, the budget underestimation reflects the government’s overly optimistic beneficiary projections, which do not align with market expectations. This issue was not addressed in the official amendment request to Congress in relation to the 2025 budget bill, which lawmakers are slated to vote on next week. Last year, the government underestimated pension expenditures by R$29.9 billion, with actual spending reaching R$938.5 billion compared to a projected R$908.7 billion. For the BPC, the underreported expenses amounted to R$7.6 billion.
The current governmental strategy involves making adjustments through bimonthly reviews of revenue and expenditures; however, experts criticize this practice, arguing that it renders the budget unreliable and misaligned with the actual fiscal landscape. While the Ministry of Planning and Budget refrained from commenting, the Ministry of Social Security did not respond to requests for information.
In summary, Brazil’s government has requested additional funding for pensions and BPC in the 2025 budget; however, experts argue that these estimates are underestimated. They anticipate significant discrepancies in actual expenditures compared to the proposed figures, highlighting an ongoing issue of budgetary misalignment. This situation questions the reliability of the government’s fiscal planning strategies and the overall transparency of budgetary processes. Public finance experts call for better alignment of projections with economic realities to ensure proper funding for social benefits.
Original Source: valorinternational.globo.com
