Posts Tagged ‘pension reform’

Italy deputy PM promises to dismantle pension reform ‘piece by piece’

June 13, 2018

The new Italian government will dismantle a 2011 pension reform “piece by piece”, Deputy Prime Minister Matteo Salvini said on Wednesday, adding that the final goal was to focus on the number of years people had worked, rather their age.

Image result for Matteo Salvini, photos

The 2011 reform, named after then-Welfare Minister Elsa Fornero, raised the retirement age and requires further rises over time, with the next hike — to 67 years from 66 years and 5 months — due to take place on Jan. 1, 2019.

Salvini said the government’s ultimate goal was to let anyone who had paid in 41 years of pension contributions to retire, regardless of how old they were.

Reporting by Alberto Sisto; Editing by Crispian Balmer



Temer warns pension reform failure will hurt Brazil’s credibility

December 22, 2017

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Brazil’s President Michel Temer


BRASILIA (Reuters) – Brazil’s President Michel Temer warned on Friday the country would face economic volatility and loss of international credibility if a bill overhauling its costly social security system is not passed by Congress early next year.

Speaking to reporters, Temer acknowledged that corruption accusations had undermined his popularity and delayed passage of a pension reform bill that is now scheduled to be put to a vote on February 19.

He said his government would not support a candidate in the 2018 presidential elections that does not back pension reform.

Reporting by Anthony Boadle; Editing by Daniel Flynn

Brazil Finance Minister Expects Economic Reforms by Year-End

September 4, 2017

Changes in pension system, corporate bankruptcy laws are at top of agenda

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Brazil’s Finance Minister Henrique Meirelles in Brasilia, Brazil April 24, 2017. REUTERS/Ueslei Marcelino

Sept. 4, 2017 9:23 a.m. ET

BRASÍLIA—Brazil Finance Minister Henrique Meirelles expects Congress to pass major economic reforms by year-end despite recent political upheaval, saying he is confident the Latin American country has put its days of populism behind it.

The government’s flagship reform to Brazil’s generous pension system could be passed as early as November, Mr. Meirelles said, while he also hopes to overhaul the country’s bankruptcy law and tax system by the end of this year.

“The idea is to create the conditions for Brazil to be able to grow for a longer period on a more sustainable basis,” he said.

Brazil’s government has pushed through a series of market-friendly reforms since President Michel Temer took over in May last year from Dilma Rousseff, reversing the high-spending and interventionist policies of her leftist Workers’ Party.

But Mr. Temer’s government was suddenly plunged into crisis three months ago when the president was accused of corruption, and later charged as part of the country’s sweeping “Car Wash” graft investigation.

“There is, at this point, a very high level of noise in politics but not necessarily uncertainty,” Mr. Meirelles said, adding that there was a consensus in the market that Mr. Temer would remain in office until scheduled elections in October 2018.

Lawmakers have so far rallied around the president, dismissing graft charges against Mr. Temer in what is expected to be a series of corruption-related charges against him. The president has denied wrongdoing.

Mr. Meirelles said he believed there was still widespread support among voters and members of Congress for the government’s reform agenda, meaning that Brazil’s next president would likely follow a similar path.

Populism “failed miserably,” said Mr. Meirelles. “The way I see it is that Brazilians are going to elect someone who wants to keep reforming and changing the Brazilian economy.”

Brazil’s economy is expected to expand only about 0.5% this year, reversing two years of contraction but far below the 1.6% pace of growth Mr. Meirelles had predicted a year ago. Unemployment remains at close to 13%.

Top of Mr. Meirelles’s list is reforming Brazil’s pension system, which is one of the world’s most generous and allows many workers to retire in their 50s, often with a full salary for life.

“Pension reform is critical to sustain Brazil’s budget in the long-run,” said Marcelo Carvalho, head of Latin American Research at BNP Paribas.

Brazil’s federal government spends just over half of its budget on social security and, left unchecked, social security spending could climb to 80% of total federal spending within a decade as the relatively young population ages, said Mr. Carvalho.

The government plans to stick with the pension reform proposal it was poised to pass before the scandal involving Mr. Temer broke earlier this year. The bill, which would introduce a minimum retirement age, among other changes, has sparked frequent protests by unions.

“We are not talking about a Plan B,” Mr. Meirelles said, adding that pension reform would likely only have a direct impact on the budget from 2020 onward.

Meanwhile, higher tax revenues from economic growth would be crucial to providing fiscal relief, he said.

Brazil’s budget deficit has ballooned over recent years to around 10% of GDP.

“Fiscal challenges remain high,” said Shelly Shetty, head of Latin American Sovereigns Ratings at Fitch Ratings. “This is due to the weak economic recovery, which is weighing on fiscal revenues, and the limited ability to adjust spending.”

As part of the reform agenda, the government is also planning to push through changes to the 2005 bankruptcy law that would give more protection to creditors and speed up the restructuring process. The bill, which Mr. Meirelles said he plans to send to Congress in a couple of weeks, would allow insolvent companies to take out new loans. It would also make it easier for businesses to sell off assets by protecting buyers from possible litigation.

Mr. Meirelles said he would later tackle Brazil’s tax system, which he said needed to be simplified.

The government has raced to push through economic reforms before Congress turns its attention next year to presidential elections. As well as passing a constitutional amendment to cap future spending, Mr. Temer’s government has simplified labor law to spur hiring and reduced restriction to private-sector investment in the oil industry and launched a massive privatization drive.

Mr. Meirelles, 72, responded to speculation that he might seek the presidency by saying that his mission for the time is to return Brazil to growth.

Write to Samantha Pearson at and Paulo Trevisani at

S&P says won’t downgrade Brazil credit ratings — for now

August 16, 2017


© AFP/File | International credit rating agency Standard and Poors said Wednesday that it has decided not to downgrade Brazil’s sovereign ratings for the time being
PARIS (AFP) – International credit rating agency Standard and Poors said Wednesday that it has decided not to downgrade Brazil’s sovereign ratings for the time being, but may well do so next year if Latin America’s biggest economy does not sufficiently tackle its debt.

S&P Global Ratings said in a statement it had removed Brazil from its CreditWatch list, “where we had placed them with negative implications on May 22, 2017”.

Brazil’s long-term sovereign debt is currently rated “BB”, which is non-investment grade or “junk”, but S&P had placed it on a list for possible downgrade after president Michel Temer was nearly ousted in a corruption scandal.

Since then, however, “the political landscape is somewhat more settled as President Temer survived a vote — by the Federal Electoral Court (TSE) in June and by Congress in August — related to corruption charges,” the rating agency said.

“Meanwhile, the economy appears to have stabilized despite fluid politics, Congress passed a labour reform in July, and the government remains committed to advancing some pension reform,” it continued.

Nevertheless, S&P said it would keep the “negative” outlook on Brazil’s ratings.

That “reflects ongoing political challenges and the risk of a downgrade over the next six to nine months — given Brazil’s high and rising debt burden — should Congress fail to advance legislation that begins to reduce Brazil’s fiscal rigidities, which hinder deficit reduction and sustained moderation in spending growth,” it argued.

Brazil’s finance minister, Henrique Meirelles, said Tuesday that the government was raising its deficit ceiling for this year and 2018 because of a big drop in tax revenue, sluggish growth and other woes in Latin America’s biggest economy.

Brazil President Weakened by Graft Charge, Losing Fiscal Battle

August 12, 2017

Aug. 11, 2017, at 3:29 p.m.


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Brazil’s President Michel Temer reacts during a ceremony in Sao Paulo, Brazil August 8, 2017. REUTERS/Leonardo Benassatto REUTERS

By Anthony Boadle

BRASILIA (Reuters) – Brazilian President Michel Temer has burned through political capital fighting corruption charges and is struggling to push forward his economic agenda meant to rein in a gaping budget deficit.

Even allies in Congress now doubt he can achieve anything but watered-down measures, likely delaying any fix to Brazil’s fiscal crisis until the economy recovers from deep recession.

With continued deficits, Brazil risks further downgrades in its credit rating. It lost its investment grade two years ago, adding to the cost of financing mounting public debt.

In a sign of Temer’s failure to restore fiscal health, the government is expected to revise upward its 2017 and 2018 deficit targets on Monday due to falling tax revenues in an economy that is barely growing.

More pessimistic analysts worry the insolvency already faced by some Brazilian states that cannot pay employees or provide basic services will reach the federal government.

Temer had a window to pass a pension overhaul earlier this year, but it closed in May when allegations emerged that he condoned bribes in a taped conversation with the then CEO of the world’s largest meatpacker JBS S.A..”We are dancing samba at the edge of the precipice,” said Sao Paulo-based wealth manager Fabio Knijnik. “I don’t see the political class at all concerned with resolving this.”

The deeply unpopular president won enough backing in Congress on Aug. 2 to block a corruption charge that could have led to his suspension pending trial by the Supreme Court. To survive, he approved about $1.5 billion in pork barrel spending to keep lawmakers happy.

His closest ally in Congress, the center-right Democrats Party of Speaker Rodrigo Maia, does not believe Temer has the 308 votes, or three-fifths of the lower chamber, needed to pass pension reform, the key measure in his fiscal rescue plan.

Speaking in Rio on Friday, Maia said Temer’s political troubles and lower-than-expected tax revenues had created the crisis. He said Brazil had no alternative but to seek whatever pension fix it could, given Congress would not raise taxes.

Congressman Efraim Filho, the Democrats whip, told Reuters Temer must dilute the pension bill to get it past Congress. He said the measure had to be stripped down to its most important provision, a minimum age for retirement of 65 years for men and 63 for women in a country where people only work on average until age 54.


Temer’s government coalition is in disarray. Parties who stood by the president are now demanding they be rewarded with cabinet positions, such as the big-budget Cities Ministry. It is now controlled by the Brazilian Social Democracy Party (PSDB), which split over whether to abandon the scandal-plagued president.

Until they get their way, the allies at the core of his coalition have said they will not put his proposed pension bill to the vote. Maia said the “climate” was not right to move to a floor vote and the bill could languish and miss a legislative window likely to close in December as an election year approaches in 2018.

The government has already made concessions on the pension bill provisions that will reduce planned fiscal savings by up to 25 percent in 10 years and nearly 30 percent in 30 years, according to Finance Minister Henrique Meirelles.

The pension overhaul is vital for Brazil to comply with a 20-year spending cap that was Temer’s first move to restore fiscal discipline, albeit without a full impact on accounts until 2019.

“That ceiling was like saying you are going on a diet two years from now,” said Daniel Freifeld of Callaway Capital, a Washington D.C.-based investment firm.

(Reporting by Anthony Boadle; Editing by Andrew Hay)