By Richard Mann, Contributing Reporter
RIO DE JANEIRO, BRAZIL – Under the “optimistic” scenario disclosed by the Independent Fiscal Institution (IFI), a division of Brazil’s federal Senate, public accounts would only revert to black by 2024, while under the “baseline” scenario, this would only happen in 2026.
The “optimistic” scenario considers the assumption that the Legislature would approve 100 percent of the pension reform proposed by the government for the National Social Security Institute (INSS) rules and the salary incentive (excluding changes in the Continuing Benefit Conveyance).
The “baseline” scenario contemplates the approval of 80 percent of the projected impact for the changes in the National Institute of Social Security (INSS), 100 percent of the effect for the salary bonus, and does not consider the proposed change in the rules for the Continuing Benefit Conveyance (BPC) – which is being scrutinized by National Congress.
According to IFI, pension reform alone will not provide the country with a “more active growth pattern,” and added that the reform “would only be the beginning of a consolidation program of public accounts for re-balancing state finances and returning the country to a state of debt sustainability.”
“As we have stated in our assessments, there is no single solution to re-balance the accounts, but a combination of paths and instruments. Undoubtedly, the discussion on Social Welfare is one of the measures that needs to progress, given its weight on public spending and the demographic prospects for Brazil,” concluded the IFI.