The Brazilian government anticipates increased spending in pensions and the BPC for 2025 but experts claim these estimates are still significantly underestimated. An analysis shows potential shortfalls in funding due to inflation miscalculations and optimistic beneficiary forecasts. This inadequacy raises concerns about the reliability of government budget projections and highlights the need for more accurate financial planning.
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 its 2025 Annual Budget Bill (PLOA). Despite these increases, experts argue that the overall estimates for spending remain significantly underestimated, as per insights from public finance specialists consulted by Valor.
The expenditures surrounding pensions and the BPC, which is designed to aid low-income elderly citizens and individuals with disabilities who have not contributed to Social Security, are mounting pressure on the federal budget. The growth of such expenditures has surpassed the 2.5% spending cap enforced by Brazil’s fiscal framework.
Expert Rogério Nagamine believes that pension expenditures in the proposed budget are underestimated by R$10 billion to R$20 billion, even post-adjustments made by the economic team on Wednesday (12). Additionally, for the BPC, he forecasts this underestimation to be around R$5 billion.
XP Investimentos anticipates pensions to consume R$1.028 trillion in 2025, which is R$12.5 billion more than the government’s revised estimate of R$1.01 trillion. For the BPC, XP projects R$129.8 billion in spending while the government estimates only R$119.1 billion. Santander has further indicated that pension costs will reach R$1.03 trillion and BPC expenditures will be R$123 billion, exceeding official projections by R$17.5 billion and R$4 billion respectively.
The economic team’s adjustments mainly accounted for inflation. When the budget bill was submitted to Congress in August 2024, the government estimated a 3.9% inflation for the IPCA (Broad Consumer Price Index) and 3.65% for the INPC (National Consumer Price Index). Actual inflation rates surpassed these projections and affect both pensions and BPC payments.
Additionally, the underestimation is attributed to overly optimistic forecasts regarding the number of beneficiaries, which diverge from market predictions. This matter was not addressed in the official request from the Ministry of Planning and Budget to the Joint Budget Committee in Congress, where amendments to the 2025 budget are being sought. Lawmakers are set to vote on these amendments next week.
Last year, the government underestimated pension spending by R$29.9 billion; the budget had proposed R$908.7 billion, yet actual expenditures summed to R$938.5 billion. The BPC faced an underestimation of R$7.6 billion.
The government has resorted to making budget adjustments through its bimonthly revenue and expenditure reviews. However, public finance experts criticize this as it leads to a budget that does not truly reflect the fiscal landscape. The Ministry of Planning and Budget and the Ministry of Social Security have not provided comments on this situation.
In summary, the Brazilian government’s proposed budget for 2025 appears significantly underestimated with respect to pension and BPC expenditures. Despite planned increases, experts assert that real costs may exceed these projections by substantial margins. This situation raises questions regarding the accuracy and reliability of budget forecasts amid rising fiscal pressures and growing costs associated with social benefits. Overall, the current budget approach has been criticized for lacking accurate reflection of fiscal realities, necessitating more cautious estimations in the future.
Original Source: valorinternational.globo.com
