(Bloomberg) -- While Brazil’s political operators are navigating a cabinet crisis, the economic team is trying to deal with special interest groups in Congress that could derail its flagship plan to cut pension outlays.
Orders from Economy Minister Paulo Guedes are to put on hold plans to cut subsidies and open the economy to foreign competitions, so as to avoid conflicts with the farm and industry caucuses that could jeopardize lawmaker support and create distractions, according to two people with direct knowledge of his thinking.
At stake is a constitutional amendment that could make or break both Brazil’s economy and decide Jair Bolsonaro’s political future. The administration has no coalition in Congress and hence must work from scratch to build support for the pension overhaul. While investors cheered outlines of the plan last week, lawmakers’ initial response was far less enthusiastic.
In a move that showcased the strength of the farm lobby, the government last week reportedly backed down from attempts to open the dairy market and said it would slap an import tax on powder milk from Europe.
Bolsonaro and ministers including Guedes will likely deliver the pension reform to lower house lawmakers on Wednesday and may discuss the bill with state governors the same day, according to the presidency’s press office. Afterward, Bolsonaro will launch a public relations campaign either through national television or social networks.
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