December 15, 2017 / 10:41 PM / a month ago

Argentine Congress to make fresh attempt at pension debate on Monday

BUENOS AIRES (Reuters) - Argentina’s lower house of Congress will try on Monday to debate the government’s pension bill, lawmakers said on Friday, after the first attempt at discussing it this week ended with violent protests that forced the legislature to suspend session.

The bill, key to President Mauricio Macri’s effort to lower business costs and reduce Argentina’s fiscal deficit, has already passed the Senate, leaving the lower house to give final legislative approval.

But Thursday’s debate was suspended after it sparked riots in the capital that were put down by police firing rubber bullets and tear gas. Opposition protesters, politicians and unions say the legislation will hurt pensioners.

For Monday’s debate, the bill will be amended to provide a bonus to the country’s most needy retirees, the government said. The move may increase its chances of passage.

The amendment “will make a strong effort” to compensate those most in need, Macri-allied house member Mario Negri told reporters. The agreement to include the bonus came after a long meeting on Friday among lawmakers, provincial governors and Macri administration officials.

Macri is aiming to cut the fiscal deficit to 3.2 percent of gross domestic product next year from 4.2 percent this year, and to reduce inflation to between 8 and 12 percent from above 20 percent this year.

The pension bill would change the formula used to calculate benefits. Payments would adjust every quarter based on inflation, rather than the current system of twice-yearly adjustments linked to wage rises and tax revenue.

Economists say the current formula means benefits go up in line with past inflation. Left unchanged, that could harm Macri’s efforts to cut the fiscal deficit.

Under the new formula, benefits would increase by 5 percentage points above inflation, according to Cabinet Chief Marcos Pena. The plan would take effect at a time of lower inflation expectations, hence slowing the pace of pension benefit increases.

Reporting by Maximiliano Rizzi and Juliana Castilla, writing by Hugh Bronstein, editing by Rosalba O'Brien

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