(Bloomberg) -- Brazil’s highly anticipated pension overhaul may finally start moving forward in Congress on Tuesday, clearing the first of several legislative hurdles it needs to overcome before becoming law.
A lower house committee started discussing whether the bill abides by the country’s constitution in a debate that’s expected to last well into the evening. As expected, opposition legislators questioned the reform’s merits in efforts to postpone what would be the first of seven votes required for its final approval. An attempt at voting failed last week when lawmakers demanded changes to the proposal.
President Jair Bolsonaro has struggled to build support for the pension reform that’s both the cornerstone of his economic policy and investors’ top wish. Friendly fire, unsuccessful negotiations with legislators and unclear communication have already put officials behind schedule in what’s expected to be a tumultuous process. At stake is a key austerity measure that investors consider crucial to reduce debt and put Latin America’s largest economy back on track.
Reform Schedule
Securing committee approval “wouldn’t be a win, but rather an advance that took way too long to happen,” said Andre Perfeito, chief economist at Necton, a brokerage. “The more time passes, the harder it will be for the government to approve the reform.”
Losing Shape
The pension bill seeks to save government coffers over 1 trillion reais ($254 billion) in 10 years by establishing a minimum retirement age and curtailing access to some social security programs. It may help recover the investment-grade status Brazil lost in 2015 as fiscal accounts quickly deteriorated.
Still, a series of homegrown scandals have undercut efforts to advance the flagship proposal. Lower house President Rodrigo Maia stepped back from his role as pension reform interlocutor after feuding with one of Bolsonaro’s sons, while Economy Minister Paulo Guedes shocked investors this month by exchanging insults with lawmakers during a hearing on the bill.
“The government has failed at negotiations from the beginning, and the strained relationship with Maia and Congress made it more difficult to govern,” said Marco Antonio Teixeira, a political science professor at the Getulio Vargas Foundation, a business school and think tank. “The final shape of the reform is not what they wanted.”
As many as 48 of the committee’s 66 members are expected to back the reform, according to a Bloomberg estimate. A simple majority would allow the bill to proceed to another lower house body where the government will face a fight over core points such as minimum retirement age, said lower house Deputy Celso Maldaner.
“We’re far from saying the troubles are over,” said Maldaner, who’s also a member of the Constitution and Justice Committee.
(Updates second paragraph with details on the lower house session.)