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  #251  
Old 01-12-2018, 04:45 PM
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BRAZIL

https://www.bloomberg.com/news/artic...r-reform-delay

Quote:
Brazil Pays Credit-Rating Price on Pension Overhaul Failure
By Ben Bartenstein , Rachel Gamarski , and Mario Sergio Lima
January 11, 2018, 5:05 PM EST Updated on January 12, 2018, 8:05 AM EST
S&P lowers Brazil long-term rating to BB-; outlook stable
Nation now at same level as Bangladesh, Dominican Republic
Spoiler:
Brazil paid the price for failing to approve President Michel Temer’s flagship pension overhaul as S&P Global Ratings downgraded Latin America’s largest economy further into junk territory.

S&P cut Brazil’s debt rating to BB-, three notches below investment grade and the same as Bangladesh, Macedonia and the Dominican Republic. The outlook is stable, S&P said.

The decision marks a defeat for Finance Minister Henrique Meirelles, who late last year met officials from the three major rating companies to fend off a downgrade. Lower house speaker Rodrigo Maia in recent days criticized those responsible for the pension revamp, an indirect slight at Meirelles that raised concern Temer’s unpopular measures will be further disrupted.


“This gives Meirelles and Maia the strongest argument they could have to convince lawmakers to vote pension reform and other measures to mend the budget gap,” said Andre Perfeito, chief economist at Gradual Investimentos. “Let’s see if they will make a lemonade out of those lemons.”

Brazil’s government gave up on efforts to vote on a social security reorganization in 2017 after struggling for support in Congress, kicking the bill back to this February and raising the prospect that nothing will be done about the country’s ballooning pension obligations until after this year’s October presidential elections.

Following a corruption scandal that undermined Temer’s political capital, the government redoubled efforts to overhaul the costly pension system before lawmakers focus on campaigning. The plan was projected to save almost 400 billion reais ($124.4 billion) over 10 years by introducing a minimum age for retirement of 65 years for men and 62 years for women, among other measures.

“Despite various policy advances by the Temer Administration, Brazil has made slower-than-expected progress in putting in place meaningful legislation to correct structural fiscal slippage and rising debt levels on a timely basis,” S&P analyst Lisa Schineller said in a statement.

Meirelles told Bloomberg that S&P’s decision reinforces the need for Brazil to pass the pension bill and measures already sent to Congress. He said he’s confident that Congress will work in favor of “the reforms and the fiscal adjustment.”

The nation lost S&P’s investment-grade stamp in September 2015 and was further cut into junk in early 2016, a move that was followed by Moody’s Investors Service and Fitch Ratings.


Brazilian financial markets oscillated last year in tandem with the changing fortunes of the pension overhaul plan. Brazil’s real was little changed at 3.2163 per dollar as of 8:03 a.m. in New York Friday as the Ibovespa retreated 0.3 percent. The cost of insuring Brazilian bonds in the credit-default swaps market for five years decreased, while the yield on the nation’s benchmark 10-year bonds rose to 4.5 percent.

The rating cut could also make it more expensive for Brazil to raise money in capital markets while rates are relatively low. Argentina paid 1 percentage point less this month to sell bonds than it did a year ago.

"The absence of cohesive political support for corrective economic measures that we have seen thus far diminishes the prospects for such a solid and prompt response following the 2018 elections," Schineller said.

https://www.reuters.com/article/us-b...KBN1F101Q?il=0

Quote:
S&P cuts Brazil debt rating as pension reform doubts grow
Spoiler:
BRASILIA (Reuters) - Ratings agency Standard & Poor’s cut Brazil’s credit rating further below investment grade on Thursday as doubts grew about a presidential election in October and a push to trim its costly pension system, seen as vital to closing a huge fiscal deficit.

Brazil's President Michel Temer reacts during breakfast with journalists at the Alvorada Palace in Brasilia, Brazil December 22, 2017. REUTERS/Adriano Machado
S&P lowered its long-term rating for Brazil sovereign debt to BB- from BB previously, with a stable outlook, citing less timely and effective policymaking. S&P also cited a risk of greater policy uncertainty after this year’s elections.

The decision underscored concerns that a business-friendly reform agenda proposed by the unpopular President Michel Temer may stall this year as a looming presidential race shortens the legislative calendar.

The Finance Ministry said in a statement that it would continue to push for an overhaul of Brazil’s social security and tax policies, adding that S&P’s decision underscored the urgency of those fiscal reforms.

Finance Minister Henrique Meirelles had met with ratings agencies to try and stave off a downgrade after the government delayed until February a vote on pension reform that had been expected last year.

“I think it’s a warning of the economic and social consequences of not approving pension reform,” said Wellington Moreira Franco, secretary-general for President Michel Temer.

The move by S&P brings its long-term sovereign rating for Brazil three notches below investment grade. Brazil is rated Ba2 by Moody’s Investors Service and BB by Fitch Ratings, both two notches into “junk” territory.

Brazil lost its investment grade rating in 2015 as the country headed into its deepest recession in decades and the government of then-President Dilma Rousseff failed to tame a budget deficit that exploded when a commodities boom faded.

The S&P downgrade “is a negative development but it was expected, particularly after pension reform was delayed. It’s not breaking news for markets,” said Goldman Sachs economist Alberto Ramos in by telephone.

Brazilian index fund iShares MSCI Brazil ETF (EWZ) slipped 0.3 percent in after-market trading in New York after gaining 1.9 percent during the session.

iShares MSCI Brazil ETF
43.18
EWZCONSOLIDATED ISSUE LISTED BY NYSE ARCA
+0.08(+0.19%)
EWZ
EWZ
“Regarding the economic effect, we will need to observe the market in the coming days. But this will aid the reform effort,” a member of Temer’s economic team said on condition of anonymity.

A spokesman for Brazil’s central bank declined to comment.

The downgrade highlights the stakes heading into this year’s wide-open presidential election, with key fiscal measures hanging in the balance and voters seething after years of corruption scandals that tarred major political parties.

Many in Brazil regarded S&P’s decision to award Brazil an investment-grade rating in 2008, then the 14th government to receive the distinction, as validation of the country’s growing leadership among emerging markets.

Since taking office last year, Temer has vowed to regain Brazil’s investment grade by cutting red tape, halting growth of public debt and privatizing state firms.

Yet Temer has struggled to close the deficit and was forced to shelve much of his reform agenda last year as he fought corruption charges that sank his approval rating into single digits.
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  #252  
Old 01-21-2018, 01:00 PM
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BRAZIL
https://www.reuters.com/article/us-b...KBN1F90QS?il=0
Quote:
Brazil President Temer says pension changes remain on agenda
Spoiler:
SAO PAULO (Reuters) - Brazilian President Michel Temer denied that his administration would give up on passing pension legislation that some in Congress have opposed, according to an interview published on Saturday.

Brazil's President Michel Temer reacts during breakfast with journalists at the Alvorada Palace in Brasilia, Brazil December 22, 2017. REUTERS/Adriano Machado
Temer told newspaper Folha de S.Paulo that approval of the proposal, which raises the retirement age, remained a key target for his administration, even though analysts and politicians say it would be nearly impossible to pass such a bill in an election year.

“I want to say that the possibility to approve the reform is very strong,” Temer said.

“Several congressmen have changed their views,” and the bill is slowly gaining more support, he added.


The pension proposal is seen as critical to reduce Brazil’s large fiscal deficit and guarantee that the government will have resources to pay a growing number of beneficiaries in a country that is getting older.

Temer said his administration “will not end” if the bill fails to pass, since it has other priorities, such as a plan to simplify the tax system.
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  #253  
Old 01-22-2018, 09:34 AM
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SPAIN

https://tinyletter.com/acs171/letter...cond-moment-29

Quote:
Spain

You may not have heard about it, but Spanish pensions are in deep trouble—serious trouble.
Spoiler:
Spanish state pensions have a terrible combination of being exceedingly generous, an average 83% replacement rate, and facing unfavorable demographics, Spain has the world’s second oldest population after Japan. Reforms in 2013 increased the retirement age and encouraged people to work longer. But a generation of young, marginally-employed Spaniards means less tax revenue and a reckoning may be coming even sooner than projected.

The Socialist government proposed a financial transaction tax to help pay for pensions. This seems counter-productive to me. It is not realistic to rely on the government and younger taxpayers to finance generous pensions for all. Spain needs to diversify its sources of retirement income. About 50% of Spaniards receive some form of pension benefit from their employer, either a Defined Benefit or a Defined Contribution, but the contributions to these plans are small. Of course they are! Why would anyone bother contributing to a pension account at work if they expect a pension with an 83% replacement rate from the government?

Spain should grow and strengthen occupational pensions. Bigger occupational pension schemes gives the government room to reduce state pensions for high earners. Benefits in the private sector are pre-funded, which means the pension assets are invested in financial markets. Growing private pensions requires a healthy financial sector, which suggests a tax on finance isn’t such a great idea.

http://www.oecd.org/spain/PAG2017-ESP.pdf

Quote:
Pensions at a Glance 2017
How does SPAIN compare?
Key findings

 Population ageing will accelerate at a very fast pace in Spain, which will have the second highest old-age dependency ratio in the OECD in 2050, after Japan.

 Future net replacement rates for average-wage full-career workers will be 82%, which is much higher than the OECD average of 63%, even after accounting for the significant pension reform legislated in 2013.

 The average labour market exit age has stagnated since 2010, widening the gap with the OECD average which has kept increasing.

 Flexible retirement is limited in Spain by large disincentives to combine work and pensions and to extend working lives after the retirement age.
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  #254  
Old 02-01-2018, 12:21 PM
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BRAZIL

https://www.reuters.com/article/us-b...KBN1FK1GX?il=0

Quote:
Brazil's Temer says pension reform bill would restore credit ratings
Spoiler:
BRASILIA, Brazil (Reuters) - President Michel Temer said on Wednesday that Brazil would recover its lost credit ratings if his plan to overhaul the costly social security system is passed by Congress.

Brazil's President Michel Temer gestures as he speaks during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 24, 2018. REUTERS/Denis Balibouse
Temer said in a radio interview he expects congressional approval of a “soft” pension reform bill to be wrapped up by March. The government is still short of votes and its congressional leaders are working on undecided lawmakers ahead of the first vote in the lower chamber in the week of Feb. 19.
https://www.bloomberg.com/news/artic...emer-s-efforts

Quote:
Brazil Pension Vote Tally Barely Budges Despite Temer's Efforts
By Samy Adghirni
January 31, 2018, 12:50 PM EST
Govt far from 308 votes needed to pass bill in lower house
Lower house speaker Maia has set Feb. 19 as date for vote
Spoiler:
As Brazil’s legislative recess enters its final days, President Michel Temer still faces an uphill battle to secure the votes for his government’s flagship pension reform bill, according to five senior government allies.

Two of Temer’s closest advisers, Government Affairs Secretary Carlos Marun and lower house government deputy-leader Beto Mansur, said on Tuesday that around 270 deputies back the constitutional amendment to curb pension outlays. That’s roughly the same level of support registered last month and far from the 308 needed to approve the bill.

The mood contrasts with Temer’s optimistic view in December that lawmakers would return from their holidays, due to end next week, "much more excited to vote on the reform." It also suggests that his government may fail to pass the closely-watched measure that both policy makers and economists say is crucial to reining in Brazil’s rising debt levels and winning back investor confidence.

"You’ve got problems in all parties in parliament, from the president’s party to the smaller caucuses," Mansur said on Tuesday after meeting with lower house Speaker Rodrigo Maia. "Everywhere you look, you have issues here and there, undecided lawmakers here and there or someone who’s genuinely against it."


In recent weeks, Temer’s government has launched an aggressive marketing campaign on radio and television in an attempt to relieve pressure on lawmakers by convincing the public of the necessity of reform. The president himself appeared on several TV variety shows, between comedy sketches and dance routines, in an effort to bring that message home. In interviews with several party leaders this week, the sense is that those efforts fell flat.

"The congressional recess only served to help time pass and move closer to elections," PSD party’s lower house leader Marcos Montes said in an interview, referring to the general elections in October. "Difficulties are increasing at every turn."

Despite the challenges, government allies insist the vote will happen as scheduled on February 19, and are confident that small tweaks to the text will help secure necessary backing. "The government only has one plan, and that’s for approval now," Marun said.

This contrasts with a comment earlier this month by a senior presidential aide, who told Bloomberg the government is considering suspending the vote on pension reform until after the October elections.
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  #255  
Old 02-02-2018, 10:20 AM
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BRAZIL

https://www.ai-cio.com/news/temers-p...ssional-votes/

Quote:
Temer’s Pension Reform Still Lacking Congressional Votes
Poll reveals massive displeasure with president’s government among Brazilians.
Spoiler:
Despite President Michel Temer’s best efforts, Brazil’s social security-linked pension reform still cannot seem to gain enough Congressional support.

According to Reuters, Minister Carlos Marun told business executives Thursday that “many” lawmakers were on the fence about approving Temer’s proposal, which looks to increase retirement and social security collection ages as a measure to curb the country’s ever-growing budget deficit.

To pass, the bill would need to be approved twice by a three-fifths super majority in each of Brazil’s two chambers, the Federal Senate (the upper house) and the Chamber of Deputies (the lower house). This would require at least 308 votes from the lower house’s 513 members, scheduled to take the first vote in the week of February 19.

Marun had told reporters Tuesday that nearly 270 votes were locked in and that the government was taking suggestions to improve the controversial bill.

The top priority of Temer’s administration, the bill has had a tumultuous time. Temer, who has been making a litany of public television appearances while his administration has been doing various radio and television marketing to drive the message home, had initially hoped it would pass last year, but it was pushed back by a corruption scandal, surgery, and an overall lack of support from the government. In addition, 2018 is an election year, which adds even more difficulty as attention is elsewhere.

Temer is not running for reelection come October. According to Reuters, in a survey by pollster Dastafolha, a whopping 70% of Brazilians cited their displeasure of his administration.


https://www.reuters.com/article/us-b...-idUSKBN1FL5LO

Quote:
Brazil pension reform lacks votes in lukewarm Congress
Spoiler:
RIO DE JANEIRO (Reuters) - The overhaul of Brazil’s social security system to reduce its burden on the government’s overdrawn accounts still does not have enough support for Congressional approval, the cabinet minister in charge of political affairs said on Thursday.

Brazil's President Michel Temer reacts during an opening session of the Year of the Judiciary, at the Supreme Court in Brasilia, Brazil February 1, 2018. REUTERS/Ueslei Marcelino
The pension reform bill is the cornerstone of President Michel Temer’s efforts to reduce Brazil’s budget deficit and is due to be put to a first vote in the lower house in the week of Feb. 19.

But Temer does not have the votes and many lawmakers in his coalition are reluctant to be seen backing an unpopular austerity measure ahead of the October general elections.


Speaking to business executives in Rio, Minister Carlos Marun said that “many” lawmakers are undecided about voting for the pension bill, which has to be approved twice in each of the chambers by a three-fifths super majority. In the lower house, that requires at least 308 votes of the 513 members.

On Tuesday, Marun told reporters that the government had “close to 270 votes guaranteed” and was working around the clock to convince more lawmakers to back the bill.

Marun said the government was open to suggestions on how to “improve” a bill that has already been diluted to make it more palatable to Congress, reducing its impact on fiscal savings.

A document obtained by Reuters this week indicated that the government is working on 88 uncommitted Congressmen and has asked businessmen to help convince the wavering lawmakers on the need to pass the bill to recover the country’s credit ratings.

A poll published on Wednesday showing how unpopular Temer is will not help win over politicians in an election year. The survey by pollster Datafolha said 70 percent of Brazilians view his government as bad or terrible.

Temer held off putting the bill to a vote in December for lack of support, delaying it until after the Christmas-to-Carnival Congressional recess that ends next week.

The delay increased market skepticism over Brazil’s ability to rein in a deficit that caused the loss of its investment grade credit rating.


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  #256  
Old 02-05-2018, 04:31 PM
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BRAZIL

https://www.reuters.com/article/us-b...-idUSKBN1FM2S8

Quote:
Brazil's Temer says time has come to vote on pension reform
Spoiler:
SAO PAULO (Reuters) - The Brazilian government will not spend much more time trying to persuade legislators to vote in favor of its proposed pension reform and will push for a quick resolution of the issue, President Michel Temer said on Friday.

FILE PHOTO: Brazil's President Michel Temer reacts during an opening session of the Year of the Judiciary, at the Supreme Court in Brasilia, Brazil February 1, 2018. REUTERS/Ueslei Marcelino
Temer said during an interview for Rede TV broadcast the government estimates it currently has the support of 271 out of 513 legislators. It would need 308 votes to pass the reform. The president expects the proposal, considered key to reduce Brazil’s growing budget deficit, to go up for a vote this month.
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  #257  
Old 02-05-2018, 04:46 PM
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BRAZIL
ARGENTINA

https://worldview.stratfor.com/artic...e-clock-reform
Quote:
Argentina and Brazil Race the Clock on Reform

Argentina's government will prioritize economic and trade liberalization reforms this year with an eye to reducing the cost of doing business in the country.
Brazilian President Michel Temer will use his remaining time in office to conclude trade negotiations and push through economic proposals such as a major privatization plan and pension reform.
The leaders in both countries must move fast to implement their respective visions for liberalization because of upcoming elections.

Spoiler:
For the economic powerhouses of the southern cone of the Americas, there's no time like the present. Argentine President Mauricio Macri's ruling coalition, Let's Change, made gains in legislative elections late last year, strengthening his hand in the pursuit of economic and trade liberalization that will allow Argentina to attract more foreign investment and benefit from possible transatlantic trade deals. And while Macri's counterpart in Brazil, Michel Temer, might not boast as strong a hand, the latter is also seeking to implement reforms that will open South America's largest country to more business. For Macri and Temer, however, looming elections oblige both to redouble their efforts on economic reforms before the clock strikes zero.

The Argentine President's To-Do List
Argentina has moved quickly on the economic reform front. After the success of Let's Change in the October 2017 polls, Macri's administration succeeded in persuading Argentina's Congress to approve tax and pension reforms before launching negotiations on comprehensive labor reform. Macri's ruling coalition does not wield a majority in either house of Congress, but his party's positive electoral performance in the elections was an indicator that his reforms to liberalize the economy and trade continue to resonate with a significant portion of Argentina's population. At the same time, Let's Change's impressive performance strengthened Macri's hand in securing opposition cooperation to pass some major economic reforms.


Macri offered more federal funds to opposition-controlled provinces and, in exchange, opposition governors agreed to pressure members of Congress from their parties to aid the government in passing important reforms on issues such as pensions and taxes. Faced with a deficit that ran more than 4 percent of the country's total gross domestic product last year, the Argentine government moved to enact the pension reform, which includes reductions in annual raises in payments to retirees, as part of the measures to save the country more than $3.5 billion a year and prepare the way for another major policy plank, taxation reform. Thanks to his tacit agreement with opposition governors, Macri secured approval in Congress in December to pass a reform that will reduce taxes from 35 percent to 25 percent over the next four years for any company that reinvests its profit in the country.

Since Macri came to power in December 2015, Argentina has imposed a series of austerity measures in an effort to reduce the country's growing fiscal deficit and dampen inflation. In his two years in power, Macri has achieved a modicum of success in tackling inflation: Last year's inflation rate ran above 24 percent — higher than the government's target of 17 percent — but the figure was still far below the 40 percent inflation rate of 2016. The government's pension reform proposal prompted some violent protests by labor and social movements, but the demonstrations failed to prevent congressional approval for the motion.

Labor reform, in fact, remains high on the government's list of priorities. Foreign investors have frequently complained about Argentina's rigid labor laws, as well as the power of its labor unions. The government, however, has solicited the views of labor unions in an effort to find some common ground on labor reform. Already, Macri's administration has reached some basic agreements with a section of the labor movement. Among other proposals, the reforms will include more flexible rules for outsourcing activities, limit the amount of monetary compensation paid to workers in labor lawsuits and grant a one-year amnesty to companies that have yet to comply with current labor laws. Over the next four months, the government is also planning to sit down with the General Confederation of Labor to evaluate a proposal to permit small companies to hire independent contractors.

Ultimately, the prospects of securing approval for the labor reforms do not appear as bright as they were for the tax and pension reforms. Accordingly, the government is already pursuing a Plan B on labor reform that includes negotiations with specific industry sectors and labor unions to increase labor flexibility. Such a plan would not require the passage of a broad labor reform package through Congress but would include more limited measures involving specific industry sectors.

Macri Cuts Through the Red Tape
Macri's administration, however, is not only pursuing macrostructural reforms in the economy. The government is also seeking to implement 170 microeconomic reforms with the goal of reducing not only the cost of doing business in Argentina, but also the amount of time companies must spend navigating the country's labyrinthine bureaucracy. In the end, the government hopes such measures will make Argentina more attractive to foreign businesses by simplifying legal procedures for investment.

In all his pursuits, time is of the essence for Argentine President Mauricio Macri.

The government already has accomplished some of its microeconomic targets, including a measure to cut the price of docking and undocking services at Rosario, one of Argentina's largest ports, by up to 40 percent. Although a relatively small measure, the move was significant because port-docking services constitute 30 percent of the total transportation costs of Argentina's agricultural exports. Macri managed to reduce the price of docking prices at Rosario because the government succeeded in breaking a monopoly that a single company had held over the port, which handles more than 80 percent of Argentina's total agricultural exports. Additionally, the government lifted a clause that required businesses to obtain government approval for import licenses for over 300 products, including televisions, cell phones, air conditioners and other consumer products. Now, companies will automatically obtain import licenses for these products.

In all his pursuits, time is of the essence for Macri. The president is expected to run for re-election next year, but because the campaign will demand most of his time in 2019 — particularly in the face of a populist revival that could capitalize on discontent with his austerity policies — he must accelerate his push for liberalization this year.

Temer's Race Against Time
To the north, Brazil is also considering similar moves, but the window of opportunity to enact liberalization reforms is even shorter than in Argentina. While Macri contends with a possible leftist reaction to his policies, Brazil's traditional parties have suffered through a corruption probe that has greatly increased the chances that an outsider will win general elections in October because of the record-low approval ratings for Temer. Still, Temer's administration approved labor reform last year and has implemented plans to gradually reduce the trade barriers on some maritime transportation services starting in 2020. The European Union has long demanded that Brasilia end protectionist measures on maritime transportation services before the signing of any free trade agreement with the Common Market of the South (Mercosur) — a deal is possible by the end of this year — while Brazil's National Confederation of Industries has openly backed Mercosur's efforts to sign a free trade agreement with Brussels.

In terms of workplace reform in Brazil, Temer already has made labor rules much more flexible, permitting more companies to hire contractors more easily. In what remains of his term, Temer will likely focus on facilitating an agreement on some key trade negotiations, such as the one between Mercosur and the European Union, and pushing through economic measures such as pension reform and a broad privatization plan. In terms of the latter measures, Temer aims to reduce an annual $50 billion deficit in the pension system and sell off 75 state-owned companies, including Latin America's largest power company, Eletrobras. The government plans to submit its pension reform bill to Congress next month, but the proposal remains unpopular, leaving the government struggling to secure enough support from lawmakers to pass the measure. By contrast, members of Congress are expected to approve the privatization plan, which has generated less controversy.

Argentina and Brazil's parallel steps toward economic and trade liberalization are of paramount importance if Mercosur intends to make progress on free trade deals, as the two countries wield the power to veto the bloc's trade agreements. Although the manufacturing industries in the two countries have frequently adopted a protectionist stance in Mercosur's trade negotiations, macroeconomic and microeconomic reforms to reduce the cost of doing business in both Argentina and Brazil have helped mitigate the reluctance of domestic industries to open the bloc's doors to trade. The challenge, however, is time: The window of opportunity to move forward with trade and economic liberalization policies is fast closing amid the prospect of political change in both countries. If the winds of change blow through Buenos Aires and Brasilia, all the efforts by the incumbent administrators are unlikely to reach fruition.
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  #258  
Old 02-06-2018, 09:47 AM
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BRAZIL

Quote:
Brazil's pension bill short on votes, running out of time
Spoiler:
BRASILIA (Reuters) - President Michel Temer appealed to Congress on Monday to approve his pension reform proposal to bring Brazil’s budget deficit under control, but a cabinet minister said his government still lacks some 40 votes to pass the unpopular bill.

Federal deputies of opposition protest showing signatures against the pension reform during an opening session of the Year of the Legislative, in Brasilia, Brazil, February 5, 2018. REUTERS/Ueslei Marcelino
Congressional leaders said that the plan to overhaul the costly social security system would never get through if it was not voted on this month before lawmakers begin to focus on the October general election.

“We have made adjustments to the bill to address legitimate concerns and create softer rules of transition. Now the time has come to take a decision,” Temer said in a message to Congress at the start of the legislative year.

His minister in charge of political affairs, Carlos Marun, however, told reporters the government was 40 votes short of the two-thirds super majority of 308 needed for approval.

Marun said he was confident that the bill would pass this month because there are between 80 and 100 Congressmen who have not yet made up their minds.

Brazil's Lower House President Rodrigo Maia and Brazil's Chief of Staff Eliseu Padilha looks at signatures used by Federal deputies of opposition in protest against the pension reform during an opening session of the Year of the Legislative, in Brasilia, Brazil, February 5, 2018. REUTERS/Ueslei Marcelino
The postponement of a vote in December has raised doubts about Temer’s ability to rein in a bulging budget deficit that cost Brazil its investment grade credit rating in late 2015.

Economists said Brazil’s deficit is unsustainable and mainly driven up by pensions. In GDP terms it has more than doubled between 2014 and 2017. Official figures released last month showed that the social security deficit grew by 18.7% in real terms in 2017, to a record 268.8 billion reais ($82.49 billion).

Federal deputies of opposition protest showing signatures against the pension reform during an opening session of the Year of the Legislative, in Brasilia, Brazil, February 5, 2018. REUTERS/Ueslei Marcelino
“The pension vote must be in February. If we delay further, we will never pass it,” lower house Speaker Rodrigo Maia said at a news conference. “Nobody will be able to govern Brazil next year if spending reforms are not made.”

Lawmakers returned from their recess on Monday to start debating the bill, which the government plans to put to the vote after next week’s Carnival holiday.

Government whips were negotiating with lawmakers for further concessions to make the bill more palatable to the lower chamber. But they said important provisions such as the introduction of a minimum age of retirement were not on the table.
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Old 02-08-2018, 08:18 PM
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BRAZIL
https://www.reuters.com/article/us-b...-idUSKBN1FR2PR

Quote:
Brazil minister says changes to pension reform guarantee passage

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BRASILIA (Reuters) - Brazil’s cabinet minister in charge of political affairs said on Wednesday that the government believes recent amendments to a pension reform bill will result in 314 members of the lower house voting in favor of it, five more than required to pass it.

FILE PHOTO: Brazil's Minister of the Government Secretariat Carlos Marun speaks during a news conference in Brasilia, Brazil, January 30, 2018. REUTERS/Ueslei Marcelino
Carlos Marun told reporters that the measure should be voted on this month and head to the Senate, where he forecast a vote in March. The government is pressing hard to trim social security to rein in surging public debt.


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Old 02-08-2018, 08:49 PM
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CHINA

http://www.scmp.com/news/china/econo...eijing-pension


Quote:
China’s ageing population is creating a new debt crisis for Beijing as pension shortfall widens
Gap between workers’ contributions and benefits paid out set to reach 600 billion yuan this year and 890 billion yuan in 2020, analyst says


Spoiler:
China’s pension shortfall is emerging as the next big challenge for policymakers as they intensify their years-long campaign to keep rising debt from derailing the economy.

CHINA AT A GLANCE
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Ageing in the world’s most populous country means pension contributions by workers no longer cover retiree benefits, forcing the government to fill that gap since at least 2014. Pension expenses rose 11.6 per cent to 2.58 trillion yuan (US$409.4 billion) in 2016, leaving the government a 429.1 billion yuan tab to cover the shortfall, according to the latest available data from the finance ministry.

That shortfall will reach 600 billion yuan this year and 890 billion yuan in 2020 if the system is not reformed, according to Wang Dehua, a researcher at the National Academy of Economic Strategy in Beijing.

China’s pension fund has US$317 billion up its sleeve ... and now it’s shopping for overseas investments

Enodo Economics in London, which has advised policymakers on the matter, forecast last year that it could soar to 1.2 trillion yuan by next year. The finance ministry does not release estimates.

“China’s biggest fiscal risk is pension risk,” said Wang, whose institute is under the Chinese Academy of Social Sciences, the government’s top think tank. “There are big problems in the pension system if it can only keep operating with large fiscal subsidies.”

Chinese Premier Li Keqiang pledged last year to continue raising basic pension payments. Photo: AFP
The shortfall adds urgency to President Xi Jinping’s quest to stem rampant growth in corporate debt, given the government will need to fund widening deficits of its own in coming years. Leaders may offer an update to the pension outlook on March 5 when they convene for the annual National People’s Congress in Beijing.

While government revenue rose 7.4 per cent last year – its first acceleration since 2011 – that is unlikely to keep rebounding amid slower economic growth. That would limit Beijing’s ability to cover the shortfall, which may push policymakers to issue debt to bridge the gap.

China to transfer state assets to pension funds in drive to make up for shortfalls

“China has been doing so well in many aspects in the past years, but it has really been left behind on pensions,” said Stuart Leckie, chairman of Stirling Finance Ltd in Hong Kong, a consulting firm for pension funds and asset managers in Hong Kong and mainland China.

Though the government may always be able to pay pensions, contributions from employees and companies could rise drastically or payouts may be cut, he said.

Premier Li Keqiang pledged in his report to last year’s congress to increase the allowances. “We will weave a strong safety net to ensure people’s well-being,” he said. “We will continue raising basic pension payments and see they are paid on time and in full.”

The population is greying quickly. The State Council said last year that about a quarter of China’s population will be 60 or older by 2030, up from 13.3 per cent in the 2010 census. Meanwhile, scrapping the one-child policy has not raised birth rates as high living costs deter larger families. Births fell to 17.2 million last year from 18.5 million in 2016.

China’s pensioners to get customised mutual-fund products for stock investment

Still, unbalanced demographic and employment trends may help the economy as they support further rebalancing and consumer spending, Enodo’s chief economist Diana Choyleva said.

“China’s greying population is often analysed in the context of a rising old-age dependency ratio and the strain it implies for the public finances,” she wrote in a report. “But it’s worth pointing out that a higher proportion of pensioners, who consume but do not produce, should lead to a structural increase in the share of consumer spending in GDP.”

Those benefits aside, signs of strain are already visible in the pension system, and the deficit is poised to “quickly increase” after 2020, according to Liu Shangxi, director of Chinese Academy of Fiscal Sciences, a think tank affiliated with the finance ministry.

The central government said in November that a handful of larger state-owned enterprises and financial institutions would transfer 10 per cent of their state-owned equity to social security funds to help ease pension payment pressure. New details have not been released.

Neither the finance ministry nor the Ministry of Human Resources and Social Security responded to requests for comment on Monday morning.

China’s rapidly greying population leaves provincial pension pots seriously short of cash

The social security ministry has delayed the release of annual social insurance reports, offering a less timely glimpse into the nation’s pension burdens.

China has been paying retirees with contributions made by the working population since it set up the current pension system in the early 1990s. The gap between money coming in and payments going out has been widening as more people retire and fewer join the workforce.

“China should encourage individuals to invest more for their retirement to reduce the burden on the government, which can’t shoulder the responsibility all on its own,” said Zhang Bin, a senior researcher at the China Finance 40 Forum, a Beijing-based think tank.


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