The Technical Budget Support Unit estimates that the additional increase in pensions proposed by the PS will have a cost of 273.8 million eurosa value that is 8.8 million euros above the accounts presented by the socialists.
“The execution since January 1, 2025 of Amendment Proposal No. 1,945C will have a negative impact on the global and budgetary balance of R$273.8 million. The extraordinary update of pensions by 1.25 percentage points up to the limit of three IAS – social support indexer – will result in a forecast increase in pension expenditure in the amount of 273.8 million eurostranslating into a expected negative impact of 0.09% of GDP on the budget balance“, say the technicians from the unit that supports deputies of the Assembly of the Republic.
The assessment released this Sunday late afternoon was made at the request of the PS so that the impacts of its own proposed amendment to the State Budget for 2025 (OE 2025) could be analyzed, but also a similar one, from Chega, which proposes a additional reinforcement of pensions of 1.5 percentage points.
In the case of the PS proposal – an additional increase of 1.25 percentage points –, the Technical Budget Support Unit (UTAO) points to an increase in expenditure of around 273.8 million euros, up from around 265 million pointed out by the PS.
Chega’s proposal for an increase of 1.5 percentage points would, as would be expected, have a greater impact on additional expenditure. However, the proposal will be rejected, with the votes of the PS and the AD parties (PSD and CDS), with the latter presenting an extraordinary reinforcement initiative in the middle of the year, but only with budgetary margin to take this measure.
UTAO recognizes that there may be some “margin of error in the basis for calculating supplementary updates”, but believes that “it will have a materially irrelevant effect on the balance forecast by the Government for 2025”, that is, the 0.3% surplus of GDP would remain.
Parliamentary technicians remember, however, that “this measure is permanent in nature and has an impact on structural expenditure that differs from the one-off nature of the extraordinary additional pensions adopted in 2024”, by the current government. This means that the impact now estimated would extend into the following years and would contribute to the calculation basis for future updates.
On the other hand, the unit coordinated by Rui Baleiras highlights that “the forecasts do not consider the quantification of macroeconomic impacts induced on the budget balance resulting from the implementation of the measure, nor the additional tax revenue from the IRS applicable to a part of the universe of pensions under analysis .”
In the specific case of the exercise, UTAO emphasizes that it was a “simplified exercise” that “only intended to capture the so-called direct effect of the two new policy measures.”
“The expected repercussion that the increase in retirees’ net income will have on private consumption and the effect of this on the collection of indirect taxes and subsequent waves of macrobudgetary impacts” was excluded from this analysis.
The technical unit recalls that “accounting for this effect would only be possible with detailed access to the distribution of pensions up to that IAS threshold (3 IAS) and with a fine job of crossing the distribution with the IRS rules.”
(News updated at 20:02 with more information)
Source: www.jornaldenegocios.pt
