Brazil’s pension reform to save $270bn in 10 years
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Stocks in Brazil steadied on Wednesday as market focus remained on the government’s proposal for pension reform, which is aimed at helping curb the country’s mounting fiscal deficit.
Latin American currencies were mixed against a slightly softer dollar with investors waiting for the U.S. Federal Reserve’s January policymaking minutes expected later in the day.
Shares on the Bovespa index in Sao Paulo rose marginally but losses by Engie Brasil Energia which reported a 49.6 percent increase in net debt at the end of the fourth quarter, capped gains on the index.
Investors were scrutinizing details of the pension proposal Brazilian President Jair Bolsonaro delivered to Congress which aims to save more than 1 trillion reais ($270 billion) in 10 years for public coffers.
The proposal predicts a sharp tightening in the granting of welfare benefits and an increase in the social security contribution rate for different salary ranges.
“The pension reform is the key thing for the Brazilian economy right now,” said Christian Lawrence, senior market strategist, LatAm FX, Rabobank.
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