The dire fiscal problem of the states
The pension reform has raised the minimum retirement age for all categories of employees, however kept privileges for police personnel (including state police forces) and teachers. In this Report we show that many state governments have exceeded the limit of 60% of Net Current Revenue (NCR) for personnel expenses (active and inactive) and that: a) the majority of those expenditures' growth in recent years was accrued to inactive personnel; and b) the spending on inactive personnel is mainly due to state police and teacher retirees. In other words, the pension reform does little to address the most important fiscal problem facing the states. If the Senate approves a parallel-proposed constitutional amendment (PEC) to reinclude the states in the pension reform package, this cannot raise the minimum retirement age of police personnel and teachers without setting the reform back to the starting block, with a new vote in the Chamber of Deputies. Thus, the grave fiscal situation of the states continues to fester, and ultimately will have reflections on the federal government’s finances. In summary, the reform approved by the Chamber was a step ahead, but still falls short of being worthy of celebration as the “solution” to the Brazilian fiscal problem.
Now read on...
Register to sample a report