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Brazil pensions: Lack-of-business, as usual

Pension reform in Brazil is going nowhere.


In February, the Brazilian government sent the army into the violent and bankrupt city of Rio de Janeiro. 

That decision put paid to the desperately needed and desperately unpopular pension reform because the country’s constitution does not allow for constitutional amendments when federal armed forces are being deployed.

Conspiracy theorists immediately suggested that the army was moved in on the day (February 19) that had been set as the deadline for the pensions vote to mask the government’s failure to muster support. To be fair, the administration admitted that it wouldn’t have got the votes anyway. 

The markets did not respond. Despite the urgency required to stem the fiscal deficit, pensions reform was already widely seen as dead and “the next president’s problem”. Notably, shares in Eletrobras rose. That was because the market now sees that the government’s plan to sell its stake becomes more likely before the election. 


The R$12.2 billion ($3.76 billion) the government eyes from the sale is even more necessary to plug the public finances. The sale would not only be good for the government – and Eletrobras – but could also signal the way forward for the next administration to cut debt and boost investment through similar sales of a long list of government-owned assets.

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