A Brazilian Congress vote on a major pension overhaul has been postponed to next year, the government’s Senate leader said on Wednesday, although cabinet ministers said they were still looking to hold the vote next week.
Senator Romero Jucá said President Michel Temer had not secured enough lower house support for the unpopular overhaul of Brazil’s costly social security system. The vote would be held in February after the Christmas recess, he said, although an extraordinary session could be held earlier in January.
Finance Minister Henrique Meirelles, however, insisted that the government was still working toward holding the lower house vote next week. Senator Jucá, he said, was only “expressing his opinion” on the matter.
The legislation, which is aimed at lowering the cost of the bloated pension system, is considered vital for Temer’s efforts to bring Brazil’s huge budget deficit under control.
Winning approval for the bill is expected to be harder next year, as general elections approach in October. Lawmakers fighting for their seats are concerned about voters’ anger over the bill’s attempt to make payouts more modest and raise the retirement age.
Investors fear that a failure to pass the bill could weaken the currency and stock market, while boosting interest rates and possibly fueling new credit rating downgrades for Brazil next year.
Meirelles, a former banker who has vowed to restore health to Brazil’s government accounts, insisted on Wednesday that the bill should be put to the vote as soon as possible. Planning Minister Dyogo Oliveira said he was unaware of any agreement to delay the vote.
But Jucá said the needed votes were not there, even though support for the bill had increased.
Lower house Speaker Rodrigo Maia, who has refused to call a vote until the government had secured the necessary three-fifths majority of 308 votes, also said backbench support for the bill had improved.
The Brazilian Social Democratic Party, Brazil’s third largest, announced its support on Wednesday, instructing its 46 lawmakers to back the bill.
Temer has warned that the economy would suffer if the pension bill is not passed. In a speech on Wednesday morning, he said cutting back Brazil’s generous pension system will be more painful to do if left to the next president, due to take office in January 2019.
“If we do not reform pensions now, in two years’ time it will have to be done more radically,” he said, in a speech seeking support from mayors for the bill.
“The economy could react negatively if we do not succeed in passing pension reform,” he said.
Temer canceled meetings aimed at shoring up support as he flew to Sao Paulo for a medical check later on Wednesday.
The bill must be approved twice in both chambers. Its approval in the Senate is expected to be easier.