Brazil's president expects weaker pension bill to pass

Brazilian President Michel Temer expects Congress to water down his proposal to overhaul pension rules and approve the new legislation by a slim majority this year, he said in a newspaper interview published on Saturday.

It was the first time Temer acknowledged there would be further changes to the proposal.

Legislators had already softened the bill earlier this year. Finance Minister Henrique Meirelles and other officials had been reiterating the importance of approving the overhaul without further changes to avoid a potential budget crisis.

Temer said he believed Congress will change the bill to have it merely set a minimum retirement age and cut public servants' benefits. The original proposal would also limit survivors' pensions, set tougher rules for rural workers and change the way retirement payments are calculated.

Another pension overhaul would probably be necessary within six years, newspaper O Estado de S. Paulo quoted Temer as saying.

Temer sees up to 310 votes in the Lower House of Congress, slightly more than the 308 needed, in favor of the proposal.

"We will do what is possible, and a possible reform will not be as thorough as it should," O Estado quoted Temer as saying.

Temer added that he saw no need to fire cabinet ministers to punish coalition parties that have not given their full support in Congress.

"Those who have not voted in line with the government will feel uncomfortable to participate in an administration that they are not supporting," Temer said. "I have the impression that they will end up leaving."

Temer said he expected interest rates to continue falling in coming months from the current 9.25 percent, with a 7.5 percent rate "very possible" by year-end.

Prosecutor General Rodrigo Janot charged Temer last month with taking bribes from meatpacker JBS SA (JBSS3.SA), which the president denies. Congress voted on Wednesday to block those charges from proceeding to the Supreme Court, but Janot may still bring additional charges in the case.

Temer said the prosecutor general was motivated politically and was not complying with his institutional role. Janot's term ends in September, and his successor, Raquel Dodge, was hand-picked by Temer in June.

Dodge will put the corruption investigations on the "right path", Temer was quoted as saying.

"The right path is to obey the law," he added. "Rigorously, to obey the law."

Source: Reuters

Brazil's finance minister rules out additional pension measures

Brazil's government sees no need for additional measures to reduce social security spending despite recent changes to a pension reform proposal, Finance Minister Henrique Meirelles said on Friday.

President Michel Temer's administration has agreed to soften the terms of its landmark social security reform to secure its approval in Congress, raising concerns among economists that further austerity measures would be necessary in coming years.

"The negotiations remain in line with our forecasts and in line with what we consider to be acceptable," Meirelles told journalists in Washington on the sidelines of the spring meetings of the International Monetary Fund and World Bank.

"The pension reform as it stands today according to the latest draft bill is acceptable and will have the necessary fiscal impact," Meirelles added.

The government initially expected the reform to reduce social security spending by 750 billion reais to 800 billion reais ($238 billion to $254 billion) over the next 10 years, Meirelles said earlier this month.

On Thursday, he estimated those savings to be 24 percent smaller due to the recent changes. Economists said about 40 percent of the original proposal was diluted.

Source: Reuters

Brazil's president says pension reform will only apply to federal system

Brazil's President Michel Temer said on Tuesday a pension reform proposed by his administration would only apply to federal employees and would not address systems managed by state governments or large cities in the South American country.

In an apparent attempt to dilute an unpopular reform that is already provoking opposition, Temer said planned changes would only apply to those included in the federal pension system. He said that many state governments were already adjusting their own pension systems or were planning to do so.

"Pension reform is for federal employees," Temer told journalists in a statement, adding that the decision followed lobbying by politicians.

Brazil's center-right government has repeatedly said that reining in pension costs by imposing a minimum retirement age and increasing contributions is essential to tackling a budget deficit that hit 9 percent of gross domestic product last year.

Investor enthusiasm for Temer's business friendly reform agenda helped make its currency and stock market amongst the best performing in the world last year.

Raul Velloso, an economist and specialist in public finances, said the announcement by Temer would complicate the budgetary adjustment as governors would face a difficult task in pushing pension reforms past state assemblies.

"This decision will weaken the budgetary adjustment," Velloso said. "It's much easier for governors to simply say that the adjustment came from Brasilia and they have to implement it."

Source: Reuters

Brazil workers protest against pension reform, disrupt transport

Brazilian civil servants, rural workers and labor confederations staged nationwide demonstrations on Wednesday against President Michel Temer's pension reform plan, with hundreds of protesters occupying the premises of the finance ministry in the capital Brasilia.

Bus and subway services were partially disrupted in São Paulo and Rio de Janeiro, the country's most populous cities. Drivers remained stranded because of small street demonstrations across several major avenues in São Paulo's eastern, southern and northern corners.

In Brasilia, more than 1,500 people from peasant and homeless groups held protests at the finance ministry, the Landless Peasant Movement said in a statement.

Finance Minister Henrique Meirelles said some damage occurred inside the ministry, without providing details.

"Several floors of the building were invaded because of this strike," Meirelles told reporters in Brasilia.

The demonstrations reflect the deep ideological divide among Brazilians as Temer seeks to pass the nation's most ambitious platform of economic reforms in two decades.

Leaders in Temer's 22-party alliance say capping pension benefits would be a key step to pull the country out of its worst recession on record.

Last week, Temer acknowledged that his administration would have to negotiate with Congress to win passage of the pension reform, which would establish a minimum age of retirement and scale back benefits for civil servants.

Still, senior lawmakers have said there is not much room for changes to Temer's original proposal if the country wants to reduce a record budget deficit that is putting the brakes on an economic recovery and hampering investor confidence.

Public transport workers in the cities of Recife, Curitiba and Belo Horizonte were also striking.

Source: Reuters