Brazil. Ministry Sees Risk of Recession if Pension Reform Bill Is Not Approved
A report conducted by the Planning Ministry assesses that if the pension reform bill is not approved by next year, the country will face yet another recession in 2019.
The payment of pensions is the federal government’s biggest expense. In order to tackle an ever-increasing deficit – which, according to official numbers, will reach R$ 184 billion (US$ 57 billion) by the end of the year – the federal government will be forced to take out further loans in order to cover its pension obligations.
The report, which was elaborated by the Ministry’s own Secretary of Economic Planning, indicates that if Brazil fails to control the deficit, then investors will perceive investments in Brazil as risky, thus leading to higher interest and inflation rates, as well as a decrease in terms of family income.
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