November 2017

28Nov

Brazil. Ministry Sees Risk of Recession if Pension Reform Bill Is Not Approved

A report conducted by the Planning Ministry assesses that if the pension reform bill is not approved by next year, the country will face yet another recession in 2019. The payment of pensions is the federal government's biggest expense. In order to tackle an ever-increasing deficit – which, according to official numbers, will reach R$ 184 billion (US$ 57 billion) by the end of the year – the federal government will be forced to take out further loans in order...

November 28, 2017
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28Nov

Brazil stocks fall on pension reform jitters

Brazilian stocks fell on Monday as traders feared the government might have to weaken pension legislation further to ensure its approval in Congress. President Michel Temer's administration agreed last week to soften its controversial plan to streamline the social security system after facing strong opposition from lawmakers. That proposal would generate fiscal savings of about 60 percent of the government's original proposal, down from 75 percent under a previous version. Investors widely see the bill as necessary to curtail rising public...

November 28, 2017
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24Nov

Brazil. Even the Watered-Down Version of the Pension Reform Lacks Backing

One day after President Michel Temer held a dinner meeting, in an attempt to gather political strength to pass the government's pension reform bill, Temer's allies are rather pessimistic concerning government's interests. Although the bill has been watered down, congressmen claim "nothing will change" regarding parliamentary support, unless the current government campaign succeeds in reducing public rejection of the reform. "Most party leaders attended dinner, but their 'followers' didn't join them. I asked: 'What happened, did you lose the strength of...

November 24, 2017
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23Nov

What’s at Stake With Brazil’s Pension Bill

Brazil’s Congress may vote in coming weeks on President Michel Temer’s flagship proposal to cap pension spending. Since it was first presented to Congress a year ago, the proposal has been watered down several times in an attempt to secure support the three-fifths majority needed in both houses. The Temer administration now expects to guarantee at least 50 percent of the 750-800 billion reais ($230-246 billion) in savings envisaged over a decade in the original proposal. The following charts show...

November 23, 2017
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21Nov

Brazil house speaker says whipping votes for pension reform difficult, but urgent

The speaker of Brazil’s lower house said on Tuesday that it will not be easy to obtain the 308 votes needed to pass a much anticipated pension reform, but that doing so is “fundamental and urgent” for the country. In an interview with Brazil’s CBN radio, Maia said it was important that the government completed a reform to Brazil’s ministerial framework soon, so that it can advance in negotiations regarding pensions. Source Reuters

November 21, 2017
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09Nov

Brazil moves to dilute unpopular pension reform bill

Brazilian congressional leaders will meet on Thursday to agree on a watered down version of an unpopular pension reform bill after the government conceded it cannot muster enough support for its proposed belt-tightening. Brazil's benchmark stock index Bovespa jumped, closing 2.7 percent higher on news of the renewed push to reduce the cost of the country's generous pension system. A day earlier, the index fell to a two-month low after President Michel Temer said the pension bill might not pass...

November 9, 2017
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08Nov

Brazil central banker urges pension overhaul to avoid market turmoil

Brazil's congress needs to reform the country's pension system while global markets are favorable or risks facing more volatility, central bank chief Ilan Goldfajn said on Tuesday during an event in Uruguay. "We don't have until the end of times to do what must be done," Goldfajn said during a panel with fellow central bank presidents from Latin America. Talks resumed last month after the lower house voted to reject a criminal charge against President Michel Temer. But pessimism over...

November 8, 2017
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October 2017

31Oct

Now or never for Brazil’s pension reform

After two years of economic recession, the Brazilian economy is finally showing signs of recovery amidst a continuous political crisis. Since officially taking office in August 2016, President Michel Temer has prioritized the implementation of a broad austerity package to include spending cuts and a series of reforms meant to stabilize Brazil’s fiscal position and promote greater economic growth. As of October 2017, Brazil’s inflation rate is at a low 2.54% and is expected to close 2017 at 3.06%, while...

October 31, 2017
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05Oct

Brazil intervenes in fraud-hit Postalis pension fund

Brazil’s pension oversight body Previc ordered a 180-day intervention in Postalis Instituto de Previdência Complementar, the pension fund for post office workers, for breaking rules on reserve requirements and investments, the regulator said on Wednesday. Postalis, Brazil’s largest fund by number of participants, has amassed billions of reais in losses over the past decade due to risky bets and has run a deficit every year since 2011. Prosecutors in May charged eight people, including the fund’s former president, with tax...

October 5, 2017
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September 2017

06Sep

More Corruption Allegations Mean Brazil Pension Reform Dies Another Day

Brazil's pension reform, which no one in their right mind believes is passing congress this year, got yet another death sentence on Monday. Lower House Speaker Rodrigo Maia said this month was a no-go for entitlement talks. Maia blamed new allegations of corruption against President Michel Temer. "I think that with another example of foul play that we are hearing about in the media makes it difficult for us to pass any proposals for changes to the constitution until the end of...

September 6, 2017
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