Brazilian Government Takes Bullish Stance on Pension Reform

Senior Brazilian officials charged with steering pension reform through Congress presented a united front on Tuesday, insisting on an end to the political finger-pointing in recent weeks that threw the government’s signature reform bill into doubt.

Brazilian stocks hit a nearly three-month low last week on growing signs of political infighting and skepticism that President Jair Bolsonaro was fully committed to the political consensus-building needed to get lawmakers to pass his pension reform bill.

But the message on Tuesday from Vice President Hamilton Mourao, Labor and Pensions Secretary Rogerio Marinho and the government’s leader in the lower house, Vitor Hugo, was that the government is listening and willing to work with Congress.

“We have high expectations that parliament will approve pension reform in the coming months, and then it’s onto tax reform,” Mourao said at an event in Rio de Janeiro.

Vitor Hugo said “a page had been turned” from the tension of last week, adding that Bolsonaro and his top ministers are getting more involved in the negotiations with lawmakers to build the political support needed to get passage approved.

Still, Brazil’s benchmark Bovespa stock index slipped nearly 1%  on Tuesday tracking losses.

The government’s plan targets over 1 trillion reais ($260 billion) in savings over the next decade from a radical overhaul of the social security system. Economists insist this is needed to shore up the public finances, revive the economy and boost investor confidence in Brazil.

But the proposal is likely to be watered down as lawmakers extract concessions and exemptions. Military personnel have already secured pay raises that almost fully make up for losses from later retirement ages and more required contributions.

Marinho said that the government continues to analyze benefits for rural and disabled Brazilians, two points that have provoked the strongest opposition in Congress.

A lawmaker survey run by transparency group Atlas Politico on Tuesday showed that the government currently has the support of 171 of the 308 lawmakers needed for the bill’s passage in the lower house, which would send the proposal to the Senate.

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