Brazil pension reform is constitutional, congressional committee votes

Pension reform in Brazil cleared a congressional hurdle late on Tuesday, a sign that the government may be garnering political backing for its most important economic proposal, legislation whose passage has not been at all certain.

After a lengthy debate, the lower house’s Constitutional and Legal Affairs Committee (CCJ) approved the bill’s constitutionality by 48 votes to 18, paving the way for it to be analyzed and discussed by a lower house special commission.

Brazil’s spending on social security is among the highest in the world, and a radical overhaul was a key proposal of President Jair Bolsonaro’s election campaign. But the government had lost momentum on the pension legislation recently, and economic data suggests the economy is flagging, perhaps even shrinking.

Brazilian markets had already rallied on Tuesday ahead of the vote, cheered by the fact that the vote was going ahead at all, after it was postponed last week when even some of the government’s allies in Congress raised objections to it.

Bolsonaro’s government made several minor changes to the bill late on Monday to win over lawmakers, but CCJ committee member Marcelo Freitas insisted that the bill’s targeted savings of just over 1 trillion reais ($255 billion) over the next decade had not been diluted.

 

Source: Reuters