BRASILIA (Reuters) – Brazil’s lower house of Congress approved a landmark overhaul of the country’s pension system on Wednesday by a far wider margin than predicted, delivering a resounding victory to the government in its quest to restore public finances to health.
Members of congress protest against the reform bill during a session to vote the pension reform bill at plenary of the Chamber of Deputies in Brasilia, Brazil July 10, 2019. REUTERS/Adriano Machado
The lower house passed the main text of the bill by a vote of 379 in favor and 131 opposed, well beyond the 308 votes required. The chamber is expected to begin voting on any amendments to the bill on Thursday.
The complete bill must then clear a second, final vote later this week before passing to Brazil’s Senate, which is expected to take up debate in August after a two-week recess.
Pension reform is the cornerstone of right-wing President Jair Bolsonaro’s economic agenda as he tries to close a massive budget gap, aiming to save the public purse around 1 trillion reais ($263 billion) over the next decade.
The vote follows months of acrimonious political drama, with Bolsonaro facing opposition from some lawmakers who resisted social security cuts, while others blamed him for tripping up progress on the controversial proposal.
“Brazil is ever closer to getting on the path to jobs and prosperity,” Bolsonaro said on Twitter, congratulating lower house Speaker Rodrigo Maia following the vote.
Brazilian markets had bet heavily on Wednesday that the bill would pass, although few had projected such a wide margin.
Brazil’s benchmark Bovespa stock index closed 1.23% higher, reducing gains after hitting an all-time high of 106,650 points. The country’s currency, the real, hit 3.7585 to the U.S. dollar, its strongest level since February.
Interest rate futures fell across the curve <0#DIJ:> as traders bet that approval will pave the way for the central bank to lower interest rates.
The Economy Ministry says Brazil’s growth and inflation prospects for years to come will rest on closing the huge budget gap created by the country’s generous pension system.
But the changes are controversial. Raising the retirement age, increasing workers’ pension contributions, and reducing some workers’ pension benefits have provoked strong opposition, although most lawmakers have come around to the idea that the deficit problem must be tackled.
Reporting by Maria Carolina Marcello, Lisandra Paraguassu, Jamie McGeever and Jake Spring; Editing by Brad Haynes, Bernadette Baum and David Gregorio