20180223-法国巴黎银行-Brazil__Pass_the_parcel_on_pensions_9页_347kb

Summary of Brazil: Pass the parcel on pensions

Core Content

This document discusses the status and implications of Brazil's pension reform and the broader economic agenda proposed by the government in 2018. The reform was postponed to the next administration, and the current government instead focused on improving the business environment and fiscal policy. The document also outlines the legal and political context of the reform delay, as well as the potential benefits and challenges of the economic agenda.

Main Points

1. Pension Reform Postponement

• The pension reform was delayed until 2019.
• The proximate cause was the military intervention in Rio de Janeiro, which legally prevents constitutional changes during the security crisis.
• The delay increases the importance of the October 2018 general election in determining the reform's future.

2. Economic Agenda for 2018

The government outlined a list of 15 measures aimed at improving the business environment, simplifying the tax system, rationalizing public spending, and strengthening institutions. These include:

• Eletrobras privatization: Set for approval in the lower house in March.
• Simplification of PIS/COFINS: Likely to be valued by companies.
• Central bank autonomy: A long-debated proposal, potentially an institutional improvement.
• Electronic lien and title: On hold in the lower house.
• End of payroll tax exemption: On hold in the lower house.
• General law for regulatory agencies: On hold in the lower house but approved in the Senate.
• General law for telecom sector: Not yet discussed.
• Legal framework for tendering and contracts: Approved in the Senate.
• New public-finance law: Not discussed in the lower house but approved in the Senate.
• Improve real estate legislation: Not discussed in the lower house, on hold in the Senate.
• Improve governance of publicly owned companies: On hold in the lower house.
• Close Brazil sovereign fund: Not received yet in both houses.
• Implement cash deposits in central bank: On hold in the lower house.
• Wage ceiling for public servants: Not discussed in the lower house, on hold in the Senate.

3. Types of Measures and Approval Process

• Constitutional amendments require at least six months to process and are more difficult to pass.
• Ordinary laws require at least three months to process and are more likely to be approved in an election year.
• Complementary laws require a longer approval process and more votes, but are still more feasible than constitutional changes.

Key Information

• The pension reform was not a priority for the current administration, which instead focused on other economic measures.
• The reform's success may depend on the outcome of the October 2018 election and the composition of the new Congress.
• The economic agenda, while not a substitute for pension reform, could have positive effects on the economy and is more politically palatable.
• The reform delay may be beneficial as it avoids the risk of dilution in an election year.

Conclusion

While the pension reform was postponed, the government's economic agenda presents a range of market-friendly measures that could improve Brazil's fiscal and institutional environment. These measures, though not addressing the core issue of pension sustainability, are more likely to be approved and may contribute positively to the economy. The upcoming elections will play a critical role in determining whether the pension reform can be successfully implemented in the future.