Brazil’s senate approves much-vaunted pension reform

The Financial Times
Paulo Guedes, Brazil's finance minister Financial Times | James Alexander Michie

Paulo Guedes, Brazil's finance minister, centre, applauds following the promulgation of the vote on pension reform in Brasilia © Reuters

Brazil’s Senate approved a much-anticipated pension reform on Tuesday, a victory for President Jair Bolsonaro that paves the way for his economics team to pursue further sweeping changes.

Decades in the works, the reform was hailed as “historic” by politicians across the spectrum. It is aimed at restoring domestic and international confidence in Latin America’s largest economy by tackling the nation’s woeful fiscal position.

By raising the retirement age for men to 65 and women to 62, the new legislation is forecast to save the state some R$800bn ($196bn) over 10 years.

The overhaul was passed following a second vote in the senate, Brazil’s upper house of parliament and although it could still be tweaked, it is expected to be formally enacted in the coming weeks.

During the first vote, several lawmakers successfully managed to dilute the legislation, but Paulo Guedes, the finance minister who spearheaded the reform, declared: “We are very happy with the result. We are on track for other reforms.”

Originally Mr. Guedes wanted the bill, which amends Brazil’s constitution, to save more than R$1tn. The revised plan passed with a vote of 60 in favour — a comfortable margin above the 49 votes required — and with 19 against.

“This fiscal impact is extremely relevant. It will give us breathing space to rebalance our budget,” said Rogério Marinho, the government’s social security secretary. “The main thing is that it creates predictability and legal certainty to demonstrate to the market that the country will honour future commitments. And it paves the way for tax reform.”

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Source: Bryan Harris and Andres Schipani | Financial Times

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