Jair Bolsonaro's pension reform overcame its first legislative hurdle

The pension reform of the Brazilian president, Jair Bolsonaro, overcame its first legislative hurdle with a very backward Congressional vote, renewing hopes that the former army captain could put the economy back on track.

After a tense debate that lasted more than eight hours, the Justice and Constitution Commission of the Chamber of Deputies declared by 48 votes for and 18 against. the bill is constitutional and can continue in Congress. The vote took place after the government yielded to the demands of the centrist party and amended several points of the law.

Bolsonaro still has a long way to go to get the final approval of the proposal, which aims to redress the deterioration of the country's public accounts and reduce debt. There are months of debate ahead and no less than six votes in both houses of Congress before the bill can become law.

There are signs that the protracted process is already affecting the financial markets as Brazilian badets they reported profits recorded after the introduction of the bill in February.

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As this is a constitutional amendment, the Pension Act you will need support from 308 of 513 MPs from the country to two different votes and, subsequently, 49 senators out of 81 to two additional votes. Vice President of Brazil, Hamilton Mourão, said in an interview this month that he hoped the proposal would be approved by August.

The pension law wants that the government saves more than 1 trillion reais ($ 254 billion) in 10 years setting a minimum retirement age and limiting access to certain social security programs. This can help recover the level of investment that Brazil lost in 2015 due to the rapid deterioration of the fiscal accounts.

Getting approval from the committee is not perceived as a victory "but a breakthrough that has taken too much time," said André Perfeito, chief economist at Necton. "The more time pbades, the more difficult it will be for the government to adopt the reform"