MercoPress. South Atlantic News Agency

Temer admits not having the votes to pass the pension reform bill: investors edgy

Temer said the coalition will only put the pension reform to the vote when it has guaranteed support of between 320/330 lawmakers to clear the 308 votes needed

Brazilian President Michel Temer acknowledged on Monday that he may not have the votes at present to pass his pension reform bill in the lower house of Congress, and the key measure for fiscal savings might not face a floor vote until late May.

 Temer said in a interview with radio stations that his coalition government will only put the pension reform to the vote when it has guaranteed the support of between 320 and 330 lawmakers to clear the 308 votes needed for approval. “It is possible that will happen in the last week of May,” Temer said.

The measure aimed at curbing social security benefits, the main cause of Brazil's gaping budget deficit, needs to be approved twice by two-thirds of the lawmakers in both chambers of Congress.

Investors are watching the fate of the pension reform closely because it will be a gauge of Brazil's commitment to fiscal discipline. That will be instrument to restoring confidence and investment and pulling the country from a two-year recession.

Temer had hoped to have pension reform enacted by mid-year, but it is now clear that it will not advance in the Senate until the second half of the year and July at the earliest. To convince lawmakers worried that the unpopular measure will hurt them at the polling booth next year, Temer will have to make new concessions.

Government officials say the bill has already been diluted and lost 25% of the planned fiscal savings, which have dropped to around 600 billion reais (US$194 billion).

The bill faces widespread resistance from Brazilians who would be forced to work more years to retire with full benefits. In the costly current social security system, they retire on average at age 54.