1st Overview Seminar debates GDP and reforms
After going through the greatest economic crisis in its history, Brazil has been slowly recovering amidst domestic and international turbulence. These local and foreign scenarios, as well as the Pension reform currently being reviewed by Brazilian Congress, are the main topics under the spotlight of the 1st Overview Seminar of 2019, to be held by FGV’s Brazilian Institute of Economics (IBRE) on Monday, March 11, from 4 p.m. to 6 p.m., at the FGV Cultural Center (Praia de Botafogo, 186. Botafogo, Rio de Janeiro/RJ).
During the event, the IBRE will present its forecasts for macroeconomic indicators such as inflation, economic activity, job market, interest and exchange rates for 2019 and subsequent years. FGV researchers will also discuss the Brazilian pension reform, which is part of the government’s liberal agenda.
According to Armando Castelar, moderator of the debate and coordinator of Applied Economics at IBRE, the bill should pass between the third and fourth quarters, ultimately resulting in massive savings for the government, depending on the final wording.
“The main debate within the pension reform is life expectancy. Poorer citizens typically retire much later than wealthier individuals. The reform sets new rules that allow people to retire around the same age. That was one of the goals set in the reform submitted by former president Temer and also one of the foundations of this bill”, said the economist.
Another important point that keeps the spotlight on the pension reform is the current situation of state governments. “The states are under massive pressure by pension spending, and the purpose of the reform is also to help them solve their serious tax problems”, said the expert.
The following IBRE researchers attended the event: Silvia Matos, coordinator of IBRE’s Macro Bulletin; José Júlio Senna, head of the Center for Monetary Studies; and Samuel Pessôa, senior associate researcher; as well as political scientist and EBAPE professor, Carlos Pereira.
Castelar believes that the pension reform’s effective impact depends on the current administration’s ability to convince Congress. Carlos Pereira shares some insights on this point. According to the political scientist, the administration may have a rough time negotiating the bill if it does not build a solid base of supporters.
“The government’s biggest challenge is to build a majority coalition. So far, the administration has focused on a minority coalition, essentially ignoring political party leaders. The government is focusing on fostering a direct connection with society, believing that this will be enough to pressure Congress into passing the reform”.
Pereira adds that this debate will continue throughout the year, which is why there must be a strong base of supporters. “Amending laws like the pension reform act, which concentrates costs in specific groups of society, is a huge challenge not only in Brazil, but in any other country. The government must have the majority of Congress on its side. But the main challenge is to make sure this majority of votes is not something temporary; it must be stable and sustainable. The reform will have at least four major voting sessions: two in the House of Representatives and two in the Senate. If the government fails to secure a stable majority of votes, it will have to build this majority in each round, which will be much more difficult and costly”.
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