Brazil's demographic transition and its effects on public spending

Abstract

This chapter presents future public spending projections for Brazil as a result of the demographic transition. The end of the demographic dividend, which will be followed by population ageing, will affect spending on health, education, social programmes and social security, including pensions. Health spending will increase significantly in absolute terms but should maintain its share as a proportion of gross domestic product (GDP). Education expenditure will decline. As education spending in Brazil is determined by the level of education, the reduction in spending will not be linear, and will affect all levels of government. The biggest challenge will be the payment of social security benefits, putting at risk the sustainability of the government finances. Therefore, the most urgent task for federal, state and municipal governments is to pursue comprehensive social security reforms that will guarantee basic government functions in the coming years.