Sep 18, 2016

Brazil - Public Expenditure Growth

Brazil - Public Expenditure  Growth

The chart below shows the growth rate above inflation of federal government spending, calculated by the sum of 12 months divided by 12 months immediately prior. It does not include the expenses of the states and municipalities.

The average rate of growth of public spending was approximately 5% above inflation between 1998 and 2016. The Social Security benefits spending grew about 6% above inflation over the same period.

The expenditure growth was only possible because there was also growth in revenues in the period, related to the expansion of GDP and rising international commodity prices.

However, from 2014, expenses kept the growth trend, while the stagnation of the economy has reduced expenditure growth, resulting in the rise in public debt.

Note that the Social Security benefits have structural feature, and the trend is growing maintenance above inflation, considering the current rules. Benefits of Social Security is now the equivalent of about 40% of total expenditure, and the trend is of explosive growth without reform of its rules.

Brazil - Expenses of Public Sector
Source: Brazilian Treasury