Brazil: Social Security deficit up 74.5%

The social security deficit reached its worst level since 1995, when the historical series began, and stood at $47.2 billion in 2016. There was an increase of 74.5%, compared with the value recorded in the previous year, which was $27 billion.

The calculations published today (Jan. 26) by the government show that the current burden of social security represents 2.4% of the gross domestic product (GDP). In 2015, this rate stood at 1.5%.

According to the Ministry of Finance, social security expenditures totaled $160.2 billion in 2016, equivalent to 8.2% of GDP. Revenues totaled $113 billion (5.8% of GDP).

Urban social security reported a deficit of $14.6 billion last year, which represents 0.7% of GDP. Rural social security achieved a negative balance of $32.6 billion, or 1.7% of GDP.

Social Security Secretary Marcelo Caetano said that structural issues explain the sharp increase in the burden in 2016. "There is the demographic aspect, since society ages and this generates more benefits, there are also structural issues. In a particular year, we may create fewer jobs. As the social security tax is very related to the payroll, it is affected."

For this year, the ministry expects social security deficit to rise again. The forecast, according to the secretary, is a negative result of about $56.8 billion. For Caetano, even if the social security reform proposed by the government is approved before December, the impact on the 2017 calculations will be minimal, since the bill is expected to be under deliberation in the National Congress for the whole year.

Translated by Amarílis Anchieta