MercoPress. South Atlantic News Agency

Brazilian pension reform savings looks to be 15% higher than originally planned

Bolsonaro told reporters in Brasilia on Thursday that the figure was the “minimum projection for the pension reform.”

Brazil’s Economy Ministry on Thursday raised its projected savings from its pension reform bill over the next decade to 1.237 trillion reais (US$ 312 billion), well above the “minimum” 800 billion reais President Jair Bolsonaro said he expects.

The new target is 15% higher than the government’s original goal of 1.072 trillion reais. Economists had already said the earlier target was highly unlikely, raising the possibility that the new figure will be even less attainable.

Adding to doubts, when asked about whether the reform might generate 800 billion reais, Bolsonaro told reporters in Brasilia on Thursday that the figure was the “minimum projection for the pension reform.”

Brazil’s government is struggling to gain traction among voters and lawmakers for its flagship legislation, which it says is necessary to shore up the country’s public finances and kick-start growth.

Bolsonaro has come under heavy criticism for failing to negotiate with lawmakers and secure the political backing needed to get it passed.

Brazilian markets have reacted accordingly. The currency briefly dipped below 4% on Thursday for the first time in a month, a break which seemed to spook investors, who quickly lifted the real back to 3.96 per dollar.

Labor and Pensions Secretary Rogerio Marinho said on Thursday that the government will fight for the 1.237 trillion reais target “in its entirety” but recognized that the final figure may be lower.

“It is the role of Congress to modify the bill within the democratic process,” Marinho said, repeating his view that it is a progressive bill that will see the better off pay more. “That is clear from today’s numbers.”

Pensions secretary Leonardo Rolim said that the decade over which the savings are targeted is being pushed back a year to 2020-29 from 2019-28, because any impact on the remainder of 2019 will be minimal.

Marinho said he expects pension reform to be approved within a “reasonable” time frame, more vague than previous predictions from Bolsonaro and Economy Minister Paulo Guedes that it will pass both houses of Congress by the end of June.

In separate comments, Brazil’s lower house speaker, Rodrigo Maia, said on Thursday that the special commission analyzing the reform bill would put together a timeline on May 6.

The updated projections estimate savings from the private sector social security system of 807.9 billion reais, up from 687.4 billion. Some 432.9 billion of that will come from urban workers’ increased contributions and 128 billion reais from the increase in their retirement age, according to the projections.

Savings from rural workers will total 92.4 billion reais over the decade, while savings from public sector civil servants will be 224.5 billion reais, up from 202.8 billion. Total savings per year are expected to start low at 15.8 billion reais in 2020, gradually rising to 231.3 billion reais by 2029, the figures show.