Good morning. The government’s pension reform begins to take shape. President Bolsonaro’s health gets worse. Geopolitics in the way of agricultural exports.


The government’s pension reform begins to take shape

Markets experienced a good day on Monday after a draft of the government’s pension reform system was published by the press. The document brings a set of proposals that are much harsher than the reform proposed by former President Michel Temer. President Jair Bolsonaro (currently in the hospital, read below) should present the reform bill to congressional leaders by the end of the month. Here are the main proposals in the draft:

  • Bumping the minimum retirement age every four years, until reaching 65 for both men and women. The minimum time of contribution to the pension system would be 20 years (25 for civil servants), but workers would only receive their full pensions after 40 years.
  • The minimum wage will no longer be the minimum pension. Low-income people over 55 would get BRL 500/month — and BRL 750 for those over 65. In the 1990s, giving retirees at least the minimum wage helped prevent a serious hunger crisis in the Northeast, according to the Institute of Applied Economics (Ipea).
  • The creation of a capitalization system — contributions go to individual accounts which are then invested, the returns are then
    used to sustain post-retirement benefits. At least <a href="https://brazilian.report/money/2018/11/29/chicago-boys-chile-brazil-paulo-guedes/" target="_blank" rel="noopener noreferrer">four Latin American countries</a> (Chile, Peru, Mexico, and Colombia) have opted for this system but are now set to change, as benefits proved to be small or the reach of the system too restrained — which left many people without access to pensions.<div class="free rcp_restricted 1"><div class="paywall "></div><p> <div class="readmore-cta-block"> <p><strong>Read the full story NOW!</strong></p> <div class="readmore-cta-grid"> <div class="readmore-cta-full"> <a href="https://brazilian.report/subscribe/free-trial/" class="button button-green button-full">Start your 7-day free trial</a> </div> <div class="readmore-cta-half"> <a class="button black-text button-full" href="https://brazilian.report/your-membership/login/?redirect_url=https://brazilian.report/newsletters/daily-briefing/2019/02/05/government-pension-reform-begins-take-shape/">Login</a> </div> <div class="readmore-cta-half"> <a class="button black-text button-full" href="https://brazilian.report/subscribe/">Subscribe</a> </div> </div> </div> </p> </div></li> <li>Going after companies with social-security debts. They have risen by 14% last year, reaching BRL 491.2bn.</li> </ul> <p>It remains uncertain how much Congress will try to amend the bill — a watered-down version would certainly impact markets.</p> <ul> <li><strong>More from TBR:</strong> <a href="https://brazilian.report/money/2018/11/11/brazil-pension-system-compared/" target="_blank" rel="noopener noreferrer"><em>How Brazil’s pension system compares to other countries</em></a></li> </ul> <hr /> <h2>President Bolsonaro&#8217;s health gets worse <a id="2" name="2"></a></h2> <p>One week after removing the colostomy bag he used since being stabbed on September 6, 2018, President Jair Bolsonaro remains under intensive care in São Paulo&#8217;s Albert Einstein Hospital. The initial release date (set for tomorrow) has been postponed at least until next Monday — and a new surgery is not off the table. Per yesterday&#8217;s medical report, the president has shown signs of an infection.</p> <p>Over the weekend, President Bolsonaro&#8217;s intestine suffered paralysis, which caused nausea and vomiting. The government&#8217;s spokesperson said it was a normal reaction to the surgery — a claim which was refuted by experts, who say it might indicate a worsening to his health. On Monday, Mr. Bolsonaro&#8217;s Twitter account posted a video of him exercising in his private hospital room. The text stated &#8220;his functions were getting back to normal.&#8221;</p> <p>While the government has set up a sort of presidential office next to Mr. Bolsonaro&#8217;s room, he remains with no official agenda and has restrictions to speak. However, nothing indicates that VP Hamilton Mourão would take over as acting president until Mr. Bolsonaro is cleared. Mr. Mourão&#8217;s 48-hour sting as interim head of state last week displeased the Bolsonaro camp, who saw the VP acting to present himself as a more moderate alternative to the president.</p> <ul> <li><strong>More from TBR:</strong> <a href="https://brazilian.report/power/2019/01/28/mourao-other-president/" target="_blank" rel="noopener noreferrer"><em>The other Brazilian president</em></a></li> </ul> <hr /> <h2>Geopolitics in the way of agricultural exports <a id="3" name="3"></a></h2> <p>Russia has threatened to ban Brazilian soybean imports, officially due to the excess of glyphosate — traditionally, Russia buys non-genetically modified products. But Brazilian agricultural producers see another reason for the move: Brazil&#8217;s hard stance on the Venezuela crisis. The Jair Bolsonaro administration has recognized National Assembly Speaker Juan Guaidó as the legitimate leader of the country, as has said Brazil would do anything to &#8220;free&#8221; Venezuela from Nicolás Maduro — who is backed by the Russians.</p> <p>Big agro worries that other countries could follow Russia and cut down on imports as a political move. Other pro-Maduro countries, such as Iran and especially China, are major importers of Brazilian commodities. Iran alone bought 27% of Brazil&#8217;s exported corn. With Argentina bouncing back after a poor harvest, grain supply won&#8217;t be lacking in Latin America — which could decrease Brazil&#8217;s leverage. It is not the first time the government&#8217;s political moves have had an impact on imports. Jair Bolsonaro&#8217;s pro-Israel stance has created a rift with Arab-majority countries, some of the main meat importers from Brazil.</p> <p><img class="alignnone size-large wp-image-13972" src="https://brazilian.report/wp-content/uploads/2019/02/7a40f499-5f2d-4138-a375-a565b7ec0177-1024x683.png" alt="" width="1024" height="683" /></p> <hr /> <h2>Brazilians want Vale held accountable for dam disaster</h2> <table class="mcnTextContentContainer" border="0" width="100%" cellspacing="0" cellpadding="0" align="left"> <tbody> <tr> <td class="mcnTextContent" valign="top">Ten days after the Brumadinho dam collapse, which has killed at least 134 people (199 others are missing), a poll released by Instituto Paraná shows that most Brazilians think mining giant Vale, which owned the dam, is the main responsible for the tragedy — and 65.7% of people believe the company should lose its permits. Most Brazilians also think Vale&#8217;s board members should go to prison. But most do not want the government to control the company, as did until 1997, when Vale went public.</td> </tr> </tbody> </table> <ul> <li><strong>More from TBR:</strong> <a href="https://brazilian.report/power/2019/02/01/vale-politics-donations/" target="_blank" rel="noopener noreferrer"><em>How Vale bought off Brazil’s political class</em></a></li> </ul> <hr /> <h2>What else you need to know today</h2> <ul> <li><strong>Corruption.</strong> The Supreme Court has sent four corruption cases against former president Michel Temer to a trial court. Out of office, Mr. Temer has lost the legal privilege of being tried exclusively by the slow-paced Supreme Court. Mr. Temer is suspected of multiple counts of corruption, including pocketing kickbacks from companies operating in the Port of Santos — Brazil&#8217;s busiest. In 2017, Mr. Temer dodged two indictment requests shelved by Congress — and these cases will now reopen.</li> <li><a id="nw" name="nw"></a><strong>Anti-crime bill.</strong><strong> </strong>Justice Minister Sergio Moro presented yesterday his <a href="https://brazilian.report/power/2019/02/04/brazil-anti-corruption-plan-explained/" target="_blank" rel="noopener noreferrer">anti-crime bill</a> — a series of proposals to change Brazil&#8217;s penal code and tackle organized crime. Experts, however, argue that the plan puts too little focus on police intelligence and on the integration between multiple law enforcement agencies. And that would limit the positive impacts of the bill, they say. Only 20% of violent crimes are solved in Brazil — due to a lack of investigative capacity from police forces.</li> <li><strong>NFL.</strong><strong> </strong>São Paulo&#8217;s Municipal Tourism Office wants to bring a National Football League game to Brazil. NFL representatives are expected to visit the city in March. Brazil is now the second-largest NFL market outside of the U.S. — in 2018, ESPN (which broadcasts the league in Brazil) led ratings during Super Bowl LII — which was also broadcasted in over 100 movie theaters. In 2019, five NFL games will be played in London and Mexico City.</li> <li><strong>Stock market.</strong><strong> </strong>Stimulated by the news of the government&#8217;s pension system plan, the São Paulo stock market hit records yesterday. The Ibovespa index reached 98,000 points for the first time, and it is a 1.4% increase away from 100,000 points. Most of the excitement, however, comes exclusively from local investors — and international players are adopting a wait-and-see stance in regards to the federal administration. 

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BY Gustavo Ribeiro

An award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.