Brazil's President-Elect Calls On Government Bill Pass Bill

Brazil's President-Elect Calls On Government Bill Pass Bill

BRASÍLIA-Brazil's president-elect urged the current administration to revive a pension overhaul before his inauguration on Jan. 1, a move cheered by markets as a crucial to jump-starting an ailing economy.

Jass Bolsonaro, who will come to Sunday's runoff, plans to start talks next week with President Michel Temer.

Mr. Bolsonaro said Tuesday in an interview with local station Bandnews TV.

His comments were taken as meaning the new administration is intent on keeping its promises to tackle complex economic issues.

Brazil faces challenges, "said Antonio Madeira, an economist at the MCM consulting firm in São Paulo. "It's like a bad illness, the sooner you treat it the better."

Officials in the centrist Temer administration Mr. Bolsonaro's team to discuss an overhaul of the insolvent pension system.

Mr. Bolsonaro's comments boosted Brazilian assets. The Brazilian real strengthened against the dollar, closing at 3.70 against the dollar Tuesday. The Ibovespa stock index rose 3.7%.

Investors hope a pension overhaul could grow to 1% this year, unchanged from 2017, and contending with an unemployment rate of 12%.

Paulo Guedes, center, the chief economic adviser for President-elect Jair Bolsonaro, speaking to the press after a meeting with Mr. Bolsonaro and party members in Rio de Janeiro on Tuesday.

Paulo Guedes, center, the chief economic adviser for President-elect Jair Bolsonaro, speaking to the press after a meeting with Mr. Bolsonaro and party members in Rio de Janeiro on Tuesday.

Photo:

Leo Correa / Associated Press

Large budget shortfalls and a heavy debt load are thus curbing private-sector investment, analysts say.

Tony Volpon, chief Brazil economist at UBS bank and a former director at Brazil's Central Bank. "Once it's dealt with, I can see the economy growing 3%. very soon. "

Mr. Temer, who has succeeded in serving President Dilma Rousseff more than two years ago, has proposed eliminating perks that allow public servants to retire in their mid-50s, often with a full salary for life, as part of an effort to narrow out a $ 73 billion annual social security deficit.

General Rodrigo Janot presented corruption charges against Mr. Temer. The move triggered a political battle in Congress, which has to approve any charges against a sitting president. Lawmakers eventually shelved the charges, but the monthslong process suffocated any chances of passing pension reform.

Mr. Temer, however, has expressed hopes it could be approved under his watch. "This is his baby," said Representative Beto Mansur, who spearheaded efforts to pass the reform. "The sooner it's voted, the sooner the new administration can focus on something else."

Mr. Bolsonaro has enlisted University of Chicago-trained economist Paulo Guedes to draw up his economic plan. Mr. Guedes, who has published a letter to a lawyer, has published his article 'pension payments-with one based on each worker's own savings.

Mr. Guedes's economic plan calls for eliminating some of Brazil's 23 ministries, thousands of civil servants, privatizing dozens of state-controlled firms and removing trade barriers.

Although Mr. Guedes's pension-reform plan is more ambitious than Mr. Temer's, the bill already revived in Congress could save precious time and advance the new administration's agenda, which is expected to fiercely resisted by leftist opposition parties.

But the pension bill remains unpopular and would still likely face hurdles as dozens of lawmakers who remain in Congress. Passing pension reform requires 308 votes in the 513-member House before it moves to the Senate, where senators have expressed more support for the bill. Still, experts say lawmakers who were re-elected this month want to get well.

Leonardo Barreto, a political consultant in Brasília, said: "It remains unpopular reform which is a lame-duck leader. But if Mr. Bolsonaro gets involved, it helps ensure congressional support, he said. "This is a great opportunity to get it done."

Write to Paulo Trevisani at paulo.trevisani@wsj.com and Jeffrey T. Lewis at jeffrey.lewis@wsj.com

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