|
|
Brazil’s Senate Approves 7.7% Increase in Pension Payments
By Maria Luiza Rabello, Business
Week
May 19, 2010
Brazil
Brazil’s Senate approved today a 7.7 percent raise in retirement payments for some of the country’s pensioners.
People who receive pensions valued more than the country’s minimum wage of 510 reais ($279) will receive the increase if President Luiz Inacio Lula da Silva doesn’t veto the measure as urged by his chief budget adviser. Lula, after the lower house approved the increase on May 5, said he sees “no need” for “crazy decisions” that may hurt economic growth.
The Senate also ratified the lower house’s decision to scrap a decade-old formula that reduces pension payments for citizens who opt to retire at a younger age.
Brazilian Planning Minister Paulo Bernardo urged Lula to veto the “demagogic” increase, which he said was motivated by political considerations ahead of October presidential and legislative elections. Bernardo said the proposed increase and changes to the pension rules would add 11 billion reais to the fiscal deficit this year.
The government is seeking to raise its primary budget surplus before interest payments to 3.3 percent of gross domestic product this year after it allowed the savings rate to fall to 2.06 percent of GDP last year as it increased spending to dig out of its first recession since 2003.
The 7.7 percent increase covers about 8.4 million beneficiaries and will cost about 8.4 billion reais out of the country’s budget, according to Senator Romero Juca, leader of the government coalition.
|
|
