Brazil puts it to widows over budget
What? the new Greece?? Getting closer to US.....
BRASÍLIA--The Brazilian Senate on Wednesday approved a controversial bill meant to save taxpayer money by reducing pension payments to widows.
The measure is part of a broader effort to reduce the government's high debt levels, which are threatening the country's investment-grade rating.
The vote is a victory for President Dilma Rousseff and comes less than a day after Congress cleared another bill that reduces unemployment benefits. Together, the bills will save some 15 billion Brazilian reais ( $4.8 billion ) in taxpayer money, government officials say.
"It is with great satisfaction that this Ministry records this victory, which is not only the government's, but Brazil's ," the Finance Ministry said in a statement after the vote. Minister Joaquim Levy has been an active participant in talks with lawmakers to get the bells approved.
The savings are meant to help Brazil resume growth, government officials have said. "Growth is not sustainable if there is no fiscal stability," Planning Minister Nelson Barbosa said at a congressional hearing before Wednesday's vote.
But that message hasn't been easy to convey. While the austerity efforts have been applauded by economists, they have faced strong opposition from unions and politicians even from Ms. Rousseff's Workers' Party , or PT.
Ms. Rousseff was re-elected last year, but during the campaign she signaled that she wouldn't pursue fiscal austerity as strongly as she is now, and many of her supporters have a hard time backing the fiscal efforts.
"Today was one of the saddest days of my life," PT Sen. Paulo Paim said Tuesday night after the first such measure was approved. "My party (is) taking away workers' rights," he said to reporters.
Conservative opposition parties also have sought to kill the fiscal measures in Congress , saying they should cut other costs before tapping into labor benefits.
The measure approved Wednesday sets a minimum of two years of marriage and 18 months of social-security contributions to entitle a spouse to receive a survivor's pension. As of now there is no time limit and just a month of contribution is enough.
The bill is now expected to be sanctioned by Ms. Rousseff.
But Congress changed the bill, originally sent by the executive, to include a clause that kills a retirement- benefit constraint introduced in 1999 to reduce the payouts to early retirees.
By killing that constraint, lawmakers effectively increased future government costs. Now it is up to Ms. Rousseff to veto the change, something likely to have a high political cost, analysts say.
But despite the hurdles, economists say the reform is needed to fix an economy jolted off track by years of overspending.
Brazil's gross debt is at 62% of gross domestic product, prompting credit-ratings firms to put the country under watch for a downgrade, likely to junk status.
Brazil grew only 0.1% in 2014 and is expected to contract this year and expand just 1% in 2016. Inflation is at 8.2%, and the central bank has pushed borrowing costs to 13.25% in an attempt to bring price increases down to 4.5% by December 2016 .
But there is no way around it, says Goldman Sachs economist Alberto Ramos . "A deep, permanent, and structural fiscal adjustment (is) key to restore domestic and external balance," he wrote in a note Wednesday about Brazil's gaping current-account deficit, which in April reached 4.53% of GDP.
Write to Paulo Trevisani at paulo.trevisani@wsj.com
(END) Dow Jones Newswires
05-27-15 2134ET
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