Under the Lula government, Brazil’s unemployment insurance system will slide into the red in 2023

After two years of operating with positive results even during the Pandemic, the Workers Support Fund (FAT) will return to the red in 2023.

The FAT provides funds for unemployment insurance and salary bonuses and is the leading financier of the National Bank for Economic and Social Development.

The analysis is from the Ministry of Labor and Employment.

According to the technicians, measures are needed to increase the available resources and avoid an imbalance over the next few years to pay for existing legal obligations besides unemployment insurance.

The diagnosis is presented while the government plans to intensify the use of the fund’s resources and allocate up to R$4.6 billion (US$900 million) per year to new programs.

The calculation indicates the need to seek an extra R$ 5.1 billion this year to avoid a hole in the FAT. The Ministry’s suggestion to solve the problem is to increase the use of resources collected from PIS/Pasep, which supplies the FAT.

In the document sent this month to Congress, in compliance with the Fiscal Responsibility Law, the estimates are revenues growing at an average of 8% until 2026 and expenses at 10%.

From 2023 to 2026, the deficit would reach R$13.1 billion.

“The estimates indicate that the FAT revenues will not be sufficient to meet the projections of its legal obligations, such as unemployment insurance, generating financial imbalance of the fund,” says the Ministry of Labor and Employment note.

According to the document, the calculations consider professional qualification programs that had increased revenue this year, besides other actions not detailed by the Ministry. Besides this, the increase in the minimum wage puts pressure on FAT expenses.

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