Economy Minister is Confident on Pension Reform Approval

By Newsfeed/Reuters

RIO DE JANEIRO, BRAZIL – Brazil’s Economy Minister Paulo Guedes said on Thursday he was confident pension reform would be approved in the next sixty to ninety days, and that it would pack a significant fiscal punch.

“We believe it will be approved, and that in 60 days there will be a favorable surprise in the Senate,” Guedes said at an event in Sao Paulo. “A climate of collaboration among the political class has replaced the one of division and distrust of recent months,” he noted.

“I am optimistic, I think that in 60 to 90 days this will be passed and we will push ahead with an extraordinarily positive agenda,” he said.

Some Congressional sources, however, say the government remains well short of the 308 votes required in the lower house to even send it to the Senate, meaning final approval could be several months away.

The bill making its way through Congress is a comprehensive package of measures, including raising the minimum retirement age and increasing workers contributions, which aims to generate savings of R$1.237 trillion (US$306 billion) over the next decade.

The government and many economists say this is vital to boosting investor, consumer, and business confidence, and bringing Brazil’s lackluster economy back to life.

Doubts over President Bolsonaro’s main economic reform are likely to have contributed to the economy shrinking in the first quarter 2019, the first contraction since 2016.

The government cut its 2019 growth forecast this week from 2.2 to 1.6 percent, but even that is above the market consensus of around 1.2 percent. Guedes said these forecasts would be revised up again in two to three months, the same timetable he predicted for pension reform approval.

He said that once pension reform is approved, boosting private investment will become the economic “battlefront”. Guedes also added that Brazil is staying out of the U.S.-China trade spat and that Brazil will negotiate with both countries.

(Source: Reuters)