The fiscal impact of population aging: The case of Brazil (Cassio M. Turra, Bernardo Queiroz, and Elisenda Rentería Pérez)

This analysis examines the fiscal impact of future changes in the age distribution of the Brazilian population. We apply a novel simulation methodology developed by the NTA team to examine the extent to which population aging will affect public transfer outflows and inflows for pensions, public health and education during the next three decades. Net public transfers are already larger for the elderly than for children (on a per capita basis) even though Brazil is still in the middle of the demographic transition process and there is high demand to expand the country’s human-capital stock. Current public policies in a context of population aging will add fiscal pressure and limit Brazil’s economic growth and development. We expect our simulations to reveal probable scenarios for fiscal imbalances in the future and cast light on ways to mitigate the fiscal risk that arises from the demographic transition.