By Maria Carolina Marcello and Jake Spring
BRASILIA (Reuters) – Brazil’s Senate approved the main text of a pension reform bill in a first-round vote on Tuesday, clearing another key hurdle for the government’s bid to narrow its massive budget gap.
The main text passed with a vote of 56 in favor – a comfortable margin above the 49 votes required – with 19 opposed and one abstention. Only 76 of 81 senators were present.
The Senate is expected to consider amendments to the bill on Wednesday before it heads to a second-round vote. Because the bill amends the country’s constitution, a second vote is required.
But the head of President Jair Bolsonaro’s political party in the Senate, Senator Major Olimpio, warned that the second vote on pension reform, scheduled for next week, may not take place if the government reneges on promises made to lawmakers in return for their support.
Olimpio told reporters that the majority view among senators at a meeting in Brasilia earlier on Tuesday is that the government must meet their demands if its main economic reform legislation of the year is to be enacted on schedule.
“It’s not a threat, it’s a warning. Most senators said ‘we are going to vote for Brazil today, but if there are no commitments made by the government, there will be no vote on the 10th,'” Olimpio said.
The concerns revolve around new proposals that will govern federal and state government finances, known as the “federative pact,” including whether regional demands will be met.
The landmark overhaul of Brazil’s costly social security system aims to save the government almost 1 trillion reais ($240 billion) over the next decade via a mix of unpopular measures like raising the minimum retirement age and increasing workers’ pension contributions.
It is being closely watched by investors worried about Brazil’s budget deficit and national debt. The government, central bank and many economists insist it is needed to boost confidence, investment and ultimately economic growth.
Senator Fernando Bezerra, the government’s leader in the upper house, was more upbeat. While admitting some senators are dissatisfied over “pending issues” and the federative pact, he said the second-round vote is still on track for Oct. 10.
“The timetable remains, but we need to talk a lot,” he said.
Senator Davi Alcolumbre, head of the upper chamber, had said last month that pension reform would clear the Senate and be ready for presidential signature by Oct. 10.
(Reporting by Maria Carolina Marcello and Jake Spring in Brasilia; Writing by Jamie McGeever; Editing by Bill Berkrot, Matthew Lewis and Gerry Doyle)