BRASILIA (Reuters) – Brazil’s lower house of Congress began final debates on Wednesday ahead of a vote on a landmark overhaul to the country’s pension system, as expectations of the bill’s passage pushed Brazilian financial markets to historic highs.
A general view of the plenary chamber of deputies during a session to vote the pension reform bill in Brasilia, Brazil July 10, 2019. REUTERS/Adriano Machado
After months of intense and often acrimonious political drama, including a late Tuesday postponement due to bargaining between the government and opposition lawmakers, Speaker Rodrigo Maia opened the voting session around midday on Wednesday.
By then, Brazil’s benchmark Bovespa stock market had already jumped nearly 2% to an all-time high above 106,000 points and the currency had hit its strongest level since March as traders bet the long-awaited approval was within reach.
Pension reform is the cornerstone of President Jair Bolsonaro’s economic agenda as he tries to bring the country’s public finances back to health, aiming to save the public purse around 1 trillion reais ($263 billion) over the next decade.
Asked about prospects for his reform bill, Bolsonaro said “Victory!” His chief of staff Onyx Lorenzoni said the government now has enough votes for it to pass.
The first round of lower house plenary voting on Wednesday will be on the basic text of the bill and any amendments that lawmakers offer, which could drag on late into the night.
Lorenzoni said the government could count on the votes of 330 lawmakers, more than the 308 needed for it to pass. He also said, all going well on Wednesday, the second round of lower house voting will take place on Friday, before Congress breaks for recess on July 18.
That would set up the Senate to begin debating the bill in August, after returning from recess.
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.
Brazilian markets cheered the prospect of a bill passing.
The Bovespa index jumped 1.9% to a new high of 106,484 points, the dollar fell as much as 1.0% to a four-month low of 3.76, and 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.
Reporting by Jamie McGeever and Lisandra Paraguassu; Editing by Bernadette Baum and David Gregorio