Brazil’s 2025 budget proposal includes increases for pensions and BPC, but experts contend these figures are underestimated. Predicted pension costs may exceed government estimates by R$10-20 billion, while BPC underestimations could reach R$5 billion. Inflation rates and beneficiary projections have not been adjusted accurately, raising concerns about fiscal reliability and previous underestimations by nearly R$30 billion in 2024.
The Brazilian government has proposed an increase of R$8.3 billion for pensions and R$678 million for the Continuous Cash Benefit (BPC) in the 2025 Annual Budget Bill (PLOA). Despite this adjustment, public finance experts assert that these amounts are still underestimated. The expenditures related to pensions and BPC, designed to assist low-income elderly and disabled individuals, exert significant pressure on the federal budget as their growth surpasses Brazil’s fiscal spending cap of 2.5%.
Rogério Nagamine, an authority on Social Security, suggests that the pension expenditures may be underestimated by R$10 billion to R$20 billion, even after recent adjustments by the economic team. Additionally, he cites an underestimation of R$5 billion for the BPC. XP Investimentos anticipates pension spending to hit R$1.028 trillion in 2025, which is R$12.5 billion more than the government’s expected R$1.01 trillion. Similarly, BPC spending is projected at R$129.8 billion, exceeding the government’s estimate of R$119.1 billion.
Santander forecasts even higher figures, estimating R$1.03 trillion for pensions and R$123 billion for the BPC, surpassing government projections by R$17.5 billion and R$4 billion, respectively. According to sources, the government’s adjustments primarily accounted for inflation rates, which were underestimated in their initial projections to Congress. The submitted budget bill anticipated a 3.9% inflation rate for the IPCA and 3.65% for the INPC, although actual rates proved to be higher.
The discrepancies in the budget stem from the administration’s overly optimistic beneficiary projections. This issue was overlooked in the proposal that the Ministry of Planning and Budget submitted to the Joint Budget Committee, which will vote on the amendments to the 2025 budget bill in the upcoming week. Previously, the government underestimated pension expenses by R$29.9 billion in 2024, with actual expenditures reaching R$938.5 billion against a projected R$908.7 billion. The BPC also experienced an underestimation of R$7.6 billion.
Critics have pointed out that the government’s strategy of making adjustments through bimonthly reviews renders the budget an unreliable reflection of fiscal realities. Despite requests for comments, the Ministry of Planning and Budget and the Ministry of Social Security have not provided responses to inquiries regarding these issues.
In conclusion, the Brazilian government’s 2025 budget proposal for pensions and the Continuous Cash Benefit is deemed by experts as significantly underestimated, potentially leading to fiscal strains. Notable discrepancies exist between government projections and expert forecasts, primarily due to inflationary increases and optimistic beneficiary assumptions. This situation calls for improved fiscal accuracy to ensure the reliability of the budget as a reflection of actual economic conditions. The historical trend of underestimations presents ongoing concerns for the government’s fiscal management, emphasizing the need for a more robust approach to budgetary assessments.
Original Source: valorinternational.globo.com
