‘Savings will be half original estimate’: PMs slash Brazil pension reform expectations
Fund managers remain positive on the prospects of Brazil’s pension reform despite recent government talks having led them to slash in half the savings they expect the reform to generate.
In February, President Jair Bolsonaro introduced to the country’s lower legislative chamber a wide-ranging pension reform bill that was expected to result in savings of 1.07 trillion Brazilian reais ($270.7 billion) over 10 years.
The bill cleared its first hurdle on April 23 when the lower house committee – the Chamber of Deputies – decided that it conformed to Brazil’s constitution. But Bolsonaro’s camp has signaled it might relent on some of the original proposals to secure support for the reform, leading investors to cut their estimates. The minimum retirement age is among the contended points.
‘We expect the government to make changes to its original proposal and the final savings to be half the original estimate of [1.2 trillion Brazilian reais],’ said David Souccar, a portfolio manager on Vontobel’s International Equity fund.
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