November 17, 2017 / 7:34 PM / a year ago

UPDATE 1-Brazil speaker says pension overhaul in danger if left until 2018

(Adds comments by Maia, political context, mention of Eletrobras sale)

BRASILIA, Nov 17 (Reuters) - The Brazilian government’s plan to overhaul the costly pension system will be in trouble if it does not clear the lower house of Congress this year, and it still lacks the votes needed for approval, Speaker Rodrigo Maia said on Friday.

Maia told Reuters that Cabinet changes by President Michel Temer benefiting coalition allies should make it clear by next week whether the government can muster the two-thirds majority of votes needed to pass pension reform in the house.

“They don’t have the votes yet ... if the bill is left for next year it will be hard to pass,” he said in an interview.

Lawmakers are worried about getting re-elected in the general elections in October and are unlikely to vote next year for the unpopular pension bill that cuts generous benefits and would make Brazilians work more years before they can retire.

Maia said it still was possible to get the bill approved in December. “We have not given up, we will work to see what we can get passed,” he said. “It will be difficult but there is still a chance.”

The financially unsustainable social security pension system is the biggest burden on a bulging budget deficit that cost Brazil its investment grade credit rating two years ago.

The bill, packaged as a constitutional amendment, needs 308 votes in the 513-seat chamber, a level of support Temer has not enjoyed since he and several Cabinet ministers were implicated in a corruption scandal in May.

Maia said a test of support for the government’s austerity program should come next week when members of Congress are expected to vote on the suspension of a pay raise for civil servants.

But the key factor will be the support of smaller parties in his coalition who are jockeying for greater influence in the Temer government.

They are particularly eyeing the big-budget Cities Ministry, whose head resigned last week due to divisions in his Brazilian Social Democracy Party (PSDB) over whether to abandon the scandal-hit Temer government ahead of an election year.

Other coalition members want to see a wider Cabinet reshuffle with changes in more than the one ministry, he said.

Maia said the lower house will quickly study and pass a bill privatizing units of Eletrobras, Brazil’s largest power utility holding, so that the Senate can give it final approval at the start of next year. (Reporting by Maria Carolina Marcello and Anthony Boadle; Editing by Bill Trott)

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