July 18, 2019 / 7:58 PM / a month ago

UPDATE 1-Brazil gov't sees pension reform savings of 933.5 billion reais

(Adds detail, quote, context)

By Marcela Ayres

BRASILIA, July 18 (Reuters) - Savings generated by the overhaul of Brazil’s social security system are expected to be 933.5 billion reais ($250 billion) over the next decade, the Economy Ministry said on Thursday, almost a quarter less than the government’s bill envisaged.

The figure is comprised of 914.3 billion reais savings from social security and retirement spending, and an additional 19.2 billion reais from an increase in banks’ ‘CSLL’ social contributions on net profit payments, pensions secretary Rogerio Marinho said.

That is 24.5% less than the 1.237 trillion reais savings outlined in the government’s constitutional amendment bill sent to Congress earlier this year, but is close enough to the 1 trillion reais mark that Economy Minister Paulo Guedes and others insisted was necessary to pack a sufficient fiscal punch.

“The fiscal impact is extremely significant, vigorous and will allow Brazil to make the changes we are proposing,” Marinho said.

Marinho also noted that another bill to combat social security fraud could save an extra 200 billion reais over the next 10 years.

The version of the bill overwhelmingly approved in a first- round vote by lower house lawmakers earlier this month now needs a second vote once Congress comes back from recess in August, before it goes to the Senate.

It is likely to be modified further in the Senate, where it also faces two rounds of voting before being passed into law, probably in September.

Marinho also said that implementing a system of private retirement accounts, a policy which Economy Minister Guedes has been a passionate advocate of, will require a new constitutional amendment.

“Paulo Guedes will make this assessment in due course,” Marinho said. ($1 = 3.73 reais) (Reporting by Marcela Ayres; Writing by Gabriela Mello and Jamie McGeever; editing by Jonathan Oatis)

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