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BRASILIA, Feb 13 (Reuters) - The Brazilian government is confident it will win a workers' pension remuneration case that could cost the treasury 160 billion reais ($66.44 billion) in potential losses.
A senior member of the government's judicial team told Reuters on Thursday that the case brought by a political party lacks legal basis and would be easily defeated in court.
The Solidariedade party, a group linked to one the country's largest workers' union, filed a suit with the country's Supreme Court on Wednesday to demand a change in the index used to correct the remuneration of the Workers' Length of Service Guarantee Fund, known as FGTS.
The case is the latest in a series of lawsuits that could result in dozens of billions of dollars in losses for the government of President Dilma Rousseff at a time when investors are paying close attention to the health of its finances.
"The (fiscal) risk here hinges on a series of variables, which are today completely in our favor... the plaintiffs have no legal basis." said the official, adding that the lawsuit is politically motivated.
He said that the fund's "TR" index could only by changed via law and that it was created decades ago precisely as an effort to reduce the number contracts pegged to inflation.
Paulo Pereira da Silva, the head of Solidariedade, said the government cheated workers out of billions of dollars in remuneration with an index that gave returns below inflation.
"The government is stealing 18 billion reais a year from workers," da Silva told Reuters. "Our legal arguments are very solid and clear; the government manipulated the fund's index. We are confident we will win the case."
Brazilian workers and employers make a mandatory monthly contribution to the FGTS, which can be later used to purchase a house. The fund pays the government's "TR" rate, a monthly average of banks' rates, plus 3.0 percent a year and is one of the country's main sources of real state credit.
Rousseff, who is planning to run for re-election in October, is trying to convince investors that she will keep the country's finances in order after a rapid deterioration of the fiscal accounts.
A negative ruling on this case could mean losses of up to 160 billion reais for the government, according to estimates from FGTS Facil, a non-profit group that monitors the fund.
A change of the index "would cause legal uncertainty... that could open the way for a review of all programs funded by the FGTS," the official said.
The government is currently fighting another case in which thousands of account holders allege that private and state-run banks failed to pay fair remuneration on deposits during the 1980s and 1990s. That case could cost banks up to 150 billion reais or about a third of their market value, according to government calculations.
The Supreme Court is expected to resume that case on Feb 26 and 27. ($1 = 2.4083 Brazilian reais) (Reporting by Alonso Soto; editing by Clive McKeef)