BRAZIL - The World Bank has approved a US$5m loan earmarked for a second wave of improvements to Brazil's Public Sector Pension System (RPPS).
The project, named the Brazil State Pension Reform Technical Assistance Project II (PARSEP II), aims to improve management of the RPPS by upgrading registries and information technology and supporting government capacity to manage the new system.
“The fiscal burden associated with pensions is a major macroeconomic issue confronting Brazilian federal and state governments today,” said John Briscoe, World Bank director for Brazil. “This project seeks to contribute to the country’s fiscal stability and economic growth by generating revenues through better pension management.”
The amount Brazil pays in public pensions is particularly large compared to other countries in the region, and is disproportional to the relatively low number of elderly and the demographically “young” population. Subsidies to cover Brazil’s federal and state public pension regimes deficits rose from 4.6% of GDP in 1998 to 5.6% in 2003/2004.
Chris Parel, World Bank co-task manager for the project stated: “Preliminary data from the first PARSEP indicates savings of about US$40m per year in ten states. The new loan will help strengthen the federal and state institutions responsible for public employee pensions, improving efficiency, reducing irregular payments and creating fiscal space.”
In addition to working with the executive branch, PARSEP II will also include activities with the legislative and judicial branches of state government.
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