Brazil tries to avert credit downgrade as pension reform doubts grow

BRASILIA: Brazil’s Finance Minister Henrique Meirelles will speak to major credit rating agencies on Thursday as the government scrambles to avoid a sovereign debt downgrade due to growing doubts that its proposed pension reform can rein in surging public debt.

A vote on the unpopular bill to overhaul the social security system, seen as vital to closing the fiscal deficit, has been delayed to 2018 after failing to muster support in Congress.

Lawmakers have warned that handling the hot-button issue ahead of next year’s elections would reduce the chances of approval.

Meirelles said in a radio interview he will tell rating agencies the delay until February does not mean pension reform will not be approved.

He told Radio Estadão it would be ‘reasonable’ for the agencies to wait until the bill is voted on before deciding on a potential downgrade.

Lower house Speaker Rodrigo Maia on Monday said pension reform would be hard to approve if the bill is not passed by February.

The first vote was put off last week and scheduled for Feb 19 after the Christmas-to-Carnival holiday recess.

Maia told a news conference there is room to discuss a longer transition period for public sector employees, to include those who started working before 2003.

While this would add to future pension costs, Maia said the government will refuse to give up one more penny in fiscal savings.

The current version of the bill would save 480 billion reais (US$146 billion) over 10 years, according to government estimates, down from 800 billion reais in the original proposal, before concessions were made to try to win passage.

Brazil’s bloated pension system, which is especially generous for public sector employees, is the main cause of a huge budget deficit that cost Latin America’s largest nation its prized investment-grade credit rating two years ago. — Reuters

The Syrian regime’s main ally in its fight against rebel groups and jihadists, Moscow looks set to take the lion’s share of contracts to rebuild.

“Major Russian investment projects in Syria have been discussed” for reconstruction, the official SANA news agency quoted Assad as saying, referring to better security in some parts of the country.

Such projects would focus on transport, commerce and energy, “including oi l, gas, phosphates, electricity and petrochemical industries”.

“Syria is a country with unlimited riches,” the news agency RIA Novosti quoted Russian Deputy Prime Minister Dmitry Rogozin as saying.

“Russian companies have the moral right to develop major economic projects here.”

Rogozin was in the Syrian capital leading the delegation of the heads of “large Russian firms”, SANA said.

“Today, the Syrian authorities want to work with Russia, and Russia alone, to re- establish all of the country’s energy capabilities,” he said.

Rogozin said both nations sought to create a joint venture to exploit a large deposit of phosphates.

Moscow is also planning to use Syrian ports to import Russian wheat to Syria, Iraq and other neighbouring states.

The World Bank estimates the cost of war- related losses in Syria at US$ 226 billion (191 billion euros), the equivalent of four times the country’s pre-war gross domestic product.

Triggered in 2011 by the repression of peaceful antiregime demonstrations, the conf lict in Syria has become ever more complex with the involvement of foreign states and jihadist groups.

The war has killed more than 340,000 people and displaced millions. — AFP