Private sector pension fund heads for huge deficit 2004

Brazil's federally-run pension fund for private-sector workers INSS is heading for a huge 31.5bn reais (US$10.6bn) deficit next year, local daily O Estado de S. Paulo reported, quoting a 2004 budget proposal submitted to Congress Thursday. If the INSS racks up the estimated deficit next year it would be the first time in history it has posted a higher deficit than the public employees' pension fund, which is estimated at 29.7bn reais in 2004. "As opposed to what has been said, the civil servants' social security deficit is under control," economist and public finance expert Flavio Tonelli Vaz was quoted by the paper as saying. The INSS has shown increasingly growing deficits from 17bn reais last year to an estimated 26.9bn reais this year - and 31.5bn reais in 2004, which is the equivalent of 1.82% of GDP. The government is fighting to obtain approval in Congress for a pension system overhaul that aims to save the country some 49bn reais over the next 20 years. The pension reform bill, which the lower house approved in a second-round vote earlier this week, has moved to the Senate for final consideration.