Brazil’s Congress is unlikely to pass pension reform legislation this year, far-right President-elect Jair Bolsonaro said on Monday, a blow to investor hopes that caused the country’s currency to weaken in futures markets.
Investors snapped up Brazilian assets in the wake of Bolsonaro’s election victory last month, cheered by his party’s stronger-than-expected showing in congressional races, which raised hopes he could make quick advances on fiscal reforms.
Many economists say cuts to Brazil’s social security system are essential to controlling a huge federal deficit and regaining Brazil’s investment-grade rating.
Last week, Bolsonaro said he would like to see some form of pension reform passed this year to make it easier to deal with the deficit after he takes office on Jan. 1.
On Monday, however, he told reporters in Rio de Janeiro that after speaking with his chief economic advisor Paulo Guedes, passing a 2018 pension reform bill looked increasingly unlikely.
He added that the reform would not just be based on crunching the numbers, but would also have to take into account the social impact of the overhaul.
Brazil’s currency, the real, weakened against the U.S. dollar in futures markets after his comments.
Bolsonaro also said that no decision had yet been taken on the next head of state-controlled oil company Petroleo Brasileiro SA, with more names for the chief executive position set to come out on Tuesday.
Separately, Guedes said on Monday that World Bank chief financial officer and former Brazilian finance minister Joaquim Levy had accepted Bolsonaro’s offer to lead state development bank BNDES.
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