Brazil’s government has proposed increases in pension and BPC spending for 2025, but experts argue these estimates are significantly underestimated. Actual pension costs may exceed forecasts by R$10 to R$20 billion while BPC spending could be underestimated by R$5 billion. Inflation adjustments do not reflect true fiscal realities, leading to concerns over budget accuracy.
The Brazilian government has proposed an increase of R$8.3 billion in pension spending and R$678 million for the Continuous Cash Benefit (BPC) in its 2025 Annual Budget Bill (PLOA). Despite these adjustments, public finance experts indicate that the actual figures remain significantly underestimated. Spending on pensions and BPC, which supports low-income elderly individuals and disabled individuals lacking Social Security contributions, poses a considerable challenge to the federal budget due to their growth exceeding the 2.5% fiscal spending cap.
Rogério Nagamine, an expert in Social Security, suggests that pension expenditures are underestimated by R$10 billion to R$20 billion following the government’s revisions. He also estimates that the budget for BPC is underestimated by R$5 billion. In contrast, XP Investimentos projects pension spending will reach R$1.028 trillion in 2025, surpassing the government’s revised projection of R$1.01 trillion by R$12.5 billion. For BPC, XP expects expenditures at R$129.8 billion, while the government’s estimate is R$119.1 billion.
Furthermore, Santander’s prediction for pension costs is R$1.03 trillion and R$123 billion for BPC, exceeding government expectations by R$17.5 billion and R$4 billion, respectively. Experts pointed out that the government’s estimates only accounted for inflation adjustments, which did not sufficiently address the actual expenditure realities, compounded by higher-than-expected inflation rates.
The government’s projection also appears overly optimistic regarding the beneficiary count, which diverges from market expectations. The recent budget request submitted to Congress does not tackle these discrepancies. Last year, the government faced a R$29.9 billion oversight in pension expenditures, where actual spending reached R$938.5 billion against a budget of R$908.7 billion, while BPC was underestimated by R$7.6 billion.
Experts have criticized the government’s reliance on bi-monthly revenue and expenditure reviews, arguing that it leads to a misleading budget representation that does not reflect genuine fiscal conditions. The Ministry of Planning and Budget declined to comment on this matter, and the Ministry of Social Security did not respond to inquiries.
In summary, Brazil’s government has acknowledged the need for budget increases regarding pensions and BPC in the 2025 Annual Budget Bill; however, these adjustments are viewed as significantly underestimated by finance experts. The discrepancy between government projections and expert estimates highlights ongoing concerns regarding the accuracy of fiscal planning. The reliance on inflation adjustments and optimistic beneficiary numbers complicates these budget forecasts, which have previously underestimated expenditures by notable margins. Public finance experts continue to call for enhanced transparency and realism in the budgeting process.
Original Source: valorinternational.globo.com
