August 5, 2017 / 3:30 PM / 17 days ago

Brazil's president expects weaker pension bill to pass: paper

Brazil's President Michel Temer delivers a speech after deputies of the lower chamber of Brazil's Congress voted to reject a corruption charge against him at the Planalto Palace in Brasilia, Brazil August 2, 2017.Adriano Machado

BRASILIA (Reuters) - Brazilian President Michel Temer expects Congress to water down his proposal to overhaul pension rules and approve the new legislation by a slim majority this year, he said in a newspaper interview published on Saturday.

It was the first time Temer acknowledged there would be further changes to the proposal.

Legislators had already softened the bill earlier this year. Finance Minister Henrique Meirelles and other officials had been reiterating the importance of approving the overhaul without further changes to avoid a potential budget crisis.

Temer said he believed Congress will change the bill to have it merely set a minimum retirement age and cut public servants' benefits. The original proposal would also limit survivors' pensions, set tougher rules for rural workers and change the way retirement payments are calculated.

Another pension overhaul would probably be necessary within six years, newspaper O Estado de S. Paulo quoted Temer as saying.

Temer sees up to 310 votes in the Lower House of Congress, slightly more than the 308 needed, in favor of the proposal.

"We will do what is possible, and a possible reform will not be as thorough as it should," O Estado quoted Temer as saying.

Temer added that he saw no need to fire cabinet ministers to punish coalition parties that have not given their full support in Congress.

"Those who have not voted in line with the government will feel uncomfortable to participate in an administration that they are not supporting," Temer said. "I have the impression that they will end up leaving."

Temer said he expected interest rates to continue falling in coming months from the current 9.25 percent, with a 7.5 percent rate "very possible" by year-end.

Prosecutor General Rodrigo Janot charged Temer last month with taking bribes from meatpacker JBS SA, which the president denies. Congress voted on Wednesday to block those charges from proceeding to the Supreme Court, but Janot may still bring additional charges in the case.

Temer said the prosecutor general was motivated politically and was not complying with his institutional role. Janot's term ends in September, and his successor, Raquel Dodge, was hand-picked by Temer in June.

Dodge will put the corruption investigations on the "right path", Temer was quoted as saying.

"The right path is to obey the law," he added. "Rigorously, to obey the law."

Reporting by Silvio Cascione; Editing by Lisa Von Ahn

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