Brazil’s government to send public sector reform to Congress within two weeks

SAO PAULO (Reuters) – Brazil’s government will submit bill that would reduce public sector costs and benefits and make it easier to fire workers to Congress “in a week or two,” Economy Minister Paulo Guedes said on Thursday.

Speaking alongside Rodrigo Maia, the speaker of Brazil’s lower house, at an event in Sao Paulo, Guedes said he confident the “administrative reform” bill will be approved this year, but he warned against a delay that he said would dilute its measures.

Maia said the bill will be given priority status.

The bill is one of the government’s main reform proposals this year, together with tax reform and a new ‘federative pact’ framework governing the flow of funding between central and local governments.

For his part, Maia, who many credit with a pivotal role in getting pension reform legislation passed last year, said the administrative reform will be a priority for Congress this year. Local elections should not hinder the process, but Congress may be quieter in the second half of the year, he warned.

Figures on Wednesday showed that the central government’s primary budget deficit narrowed last year to its smallest since 2014, although social security expenditure rose 5%. It was the government’s sixth annual primary deficit in a row.

Guedes rebutted suggestions that conservative President Jair Bolsonaro is lukewarm on administrative reform, insisting that he backs the proposals although, for him, it is “question of timing.”

The economy minister also said the government will do all it can to ensure tax reform, aimed at simplifying the system and ultimately reducing the tax burden, is approved this year. Maia said he believes there is widespread support for it in Congress.

Many analysts are highly skeptical, however, that meaningful reform of Brazil’s tax system will be achieved, certainly this year, noting its complexity and the loaded legislative calendar.

(Reporting by Jose Gomes Neto; Writing by Jamie McGeever; Editing by Alison Williams and Paul Simao)