Brazil administrative reform to generate at least $57 billion savings over 10 years, economy minister says

BRASILIA (Reuters) - The Brazilian government’s administrative reform proposals to simplify and reduce the cost of the public sector will generate at least 300 billion reais ($57 billion) of savings over the next decade, Economy Minister Paulo Guedes said on Wednesday.

This was the first estimate of how much the wide-ranging reforms will save the public purse.

The government presented its constitutional reform bill to congress last week, the first of a three-part legislative process. Officials said savings forecasts would come when second and third phases of guidelines on salaries are presented.

But speaking in an online live event hosted by the Braziliense Institute of Public Law, Guedes on Wednesday said a conservative estimate would be 300 billion reais over the next decade.

“In a very moderate way, we believe that it (savings) will be about 300 billion reais over 10 years. It is an important number,” Guedes said, noting that this follows last year’s social security reform that aims to generate savings of around 800 billion reais over 10 years.

“When you add it all up, you really regain control over the future path of public spending, which was our main concern - how to control the explosive dynamic of public spending,” Guedes said.

The economy ministry last week revised its 2020 fiscal forecasts to new record levels, to account for the extension of emergency payments to the poor through the end of the year.

The ministry now expects the central government primary deficit excluding interest payments to reach 866.4 billion reais ($167 bln) or 12.1% of gross domestic product this year, up from 787.4 billion reais, or 11% of GDP, as forecast in July.

Guedes said he expects the administrative reform bill to have a relatively smooth passage through congress and be approved later this year.

The reform bill will make it easier to fire civil servants and cuts their benefits, and gives the president sweeping powers to eliminate public sector jobs and bodies without congressional approval.

($1 = 5.30 reais)

Reporting by Marcela Ayres and Jamie McGeever; Editing by Steve Orlofsky