Brazil faces growing social security and fiscal challenges

Brazil is confronting significant fiscal pressures related to its social security system (INSS) and public debt. Data indicates a growing imbalance in the pension system: while the number of contributors grew by 12.8% over the last decade, expenditures rose by 20.6%. This trend is exacerbated by an aging population, which is reducing the ratio of active workers to retirees.

Political candidates have largely avoided addressing these actuarial issues, instead promising to maintain real increases in the minimum wage, which further drives up social security spending. Experts suggest that the 2019 pension reform may not be sufficient to ensure long-term sustainability, and future reforms may be necessary to address the projected R$ 1.4 trillion in benefit expenses.

Additionally, the trajectory of Brazil's public debt remains a critical concern. While the debt increased by 11 percentage points during the Lula administration due to high interest rates, previous fiscal management involved accounting maneuvers and the accumulation of significant unpaid court-ordered debts (precatórios), which the current administration has had to address through extraordinary credits.