Published On: Wed, Apr 3rd, 2019

Brazil economy minister defends pension reform in heated hearing

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FILE PHOTO: Brazil's Economy Minister Paulo Guedes attends a meeting with Social Liberal Party (PSL) lawmakers in Brasilia
FILE PHOTO: Brazil’s Economy Minister Paulo Guedes attends a meeting with Social Liberal Party (PSL) lawmakers in Brasilia, Brazil April 2, 2019. REUTERS/Adriano Machado

April 3, 2019

By Jamie McGeever and Marcela Ayres

BRASILIA (Reuters) – Brazil’s Economy Minister Paulo Guedes on Wednesday put up a vigorous defense of the government’s proposed pension reform, insisting it is critical to fixing the country’s “doomed” social security system but opening the door to some concessions.

In often heated and combative exchanges with lawmakers at Brazil’s Constitutional and Legal Affairs Committee (CCJ), Guedes said the proposals were progressive, would reduce inequality, and were urgently needed to address the country’s “inescapable” fiscal problems.

“It’s important to understand that our system is financially doomed, no matter the government in power,” Guedes told the CCJ.

President Jair Bolsonaro’s plans aim to save over 1 trillion reais ($260 billion) over the next decade through a range of reforms including raising the minimum retirement age and making workers contribute into the system for longer.

Guedes recognized that proposed changes to elderly and disabled workers’ pensions are a sensitive and increasingly problematic issue, adding that the role of Congress would be to weigh those concerns and act on them.

He also defended the introduction of private retirement accounts, which he called fairer and more helpful for boosting economic growth, citing the example of Chile’s system.

Bolsonaro and Guedes have been heavily criticized for not reaching out to lawmakers in order to build the political consensus needed to secure the bill’s passage through Congress.

That criticism reached a crescendo last week when Guedes skipped a CCJ hearing on the reforms, which helped spark a steep selloff in Brazilian markets as investors feared political infighting would hold up deliberations on the bill.

Guedes has since tried to strike a more conciliatory tone, insisting that the “noise” of late March will diminish, and that Bolsonaro and his administration are listening to lawmakers’ concerns. But that wasn’t always in evidence on Wednesday.

“Venezuela’s better! Venezuela’s good!” Guedes responded in a heated exchange with deputies who had shouted down his praise for Chile’s privatized social security system.

“Speak up! I can’t hear you!” Guedes goaded, ironically.

Guedes insisted on Wednesday that his role in pension reform is only to put forward the proposals, not to enter the political debate.

The government needs at least 308 of the 513 deputies in the lower house to approve the reforms, sending them to the Senate.

A survey run by transparency group Atlas Politico on Wednesday showed that the government currently has the support of 171 lawmakers in the lower house.

(Reporting by Jamie McGeever and Marcela Ayres, Editing by Rosalba O’Brien and Susan Thomas)

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