ADVERTISEMENT

Brazil Investors See Faster Approval of More Robust Pension Bill

Brazil Investors See Faster Approval of More Robust Pension Bill

(Bloomberg) -- Brazil watchers are increasingly optimistic on the outlook for an overhaul of the social security system, anticipating both a deeper fiscal impact and rising odds of the lower house approving the bill as soon as July.

Investors and economists now estimate that the reform will lead to savings of around 738 billion reais ($192 billion) over 10 years, up from 680 billion reais in late May, according to projections taken from interviews and research reports. That’s about 62% of the government’s original target.

Click here to see table with estimates by financial institutions.

Lower house speaker Rodrigo Maia has reaffirmed his plan to put the bill to a vote in the plenary before the legislative recess, which starts on July 18. President Jair Bolsonaro’s Chief of Staff Onyx Lorenzoni told Bloomberg on Monday that over 330 lawmakers would vote in favor of the current text presented by the pension bill’s rapporteur Samuel Moreira.

“The recent signals that Brazil’s lower house may vote on the pension reform before the legislative recess show that the government probably has the necessary votes” said Mariana Guarino, a portfolio manager at Truxt, which has about $2.8 billion in assets under management. “A greater confidence over the votes leads to expectations of less watering down,” she said.

While participants largely expect the pension reform to be approved in the lower house by the third quarter of the year, the number of respondents seeing its passage by July has increased by 100%. Only 7% of participants expect the bill’s vote to take place in the last three months of the year.

--With assistance from Simone Iglesias and Murilo Fagundes.

To contact the reporter on this story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Bruce Douglas

©2019 Bloomberg L.P.