SAO PAULO: Brazilian markets fell on Thursday after President Michel Temer’s administration failed to gather enough support from lawmakers to put a pension overhaul plan to a vote.
A senior lawmaker said on Wednesday that the government’s coalition expected to have enough votes later that day to pass the bill, which investors see as crucial to curbing public debt.
But a failure to do so led policymakers to put off a decision, originally planned for Wednesday, to formally schedule the vote, suggesting that the administration might have overestimated its clout in Congress.
“The market is anticipating that the pension reform will not be voted this year,” said Coinvalores brokerage head of strategy Paulo Nepomuceno.
Delaying the vote on the unpopular measure to 2018 would put it close to next year’s elections, a move most investors see as reducing its likelihood of approval.
The Brazilian real weakened 0.14 percent, while the benchmark Bovespa index fell more than 1 percent.
Other Latin American currencies mostly weakened due to expectations that the United States will push through a tax overhaul.
US Senate Republicans agreed to talks with the House of Representatives on sweeping tax legislation on Wednesday, amid early signs that lawmakers could bridge their differences and agree on a final bill ahead of a self-imposed Dec. 22 deadline.
The tax plan could boost economic growth and inflation, prompting the Federal Reserve to raise interest rates at a faster-than-expected pace in coming months. Higher US rates tend to drain funds away from emerging markets.
Source: Brecorder.com
