Brazil Senate Delays Vote on Levy Bill to Cut Job Benefits

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Brazil’s Senate delayed until next week the vote on a key portion of Finance Minister Joaquim Levy’s package to shore up fiscal accounts.

The ruling coalition has 12 votes more than needed to approve legislation May 26 making it harder for workers to access unemployment insurance, said Delcidio do Amaral, the government’s leader in the Senate. The opposition leader in the Senate, Ronaldo Caiado, said the delay is a defeat for the government and shows a lack of support in the 81-seat Senate.

Levy has been lobbying legislators for months to approve measures to shrink the budget deficit, saying failure to comply puts Brazil at risk of a credit downgrade. Wednesday’s decision to postpone the vote came just hours after 12 senators, including some members of the ruling party, said the minister’s plan puts an undue burden on workers amid rising unemployment.

“They are still struggling with a frail coalition,” Andre Cesar, an independent political analyst who previously worked at CAC Consultoria, said by telephone. “As each day passes, they start running against the clock to approve the measures.”

Unemployment rose to 6.4 percent in April and the economy contracted more than forecast in March, according to two separate government reports published Thursday.

‘Tight Vote’

The government needs to lay out a plan to attract investments and boost economic growth to gain support for the bills which cut spending, said Senator Romero Juca, a member of the ruling coalition.

“It’s going to be a tight vote,” Juca said in a phone interview from Brasilia.

President Dilma Rousseff has until June 1 to sign the legislation before it expires. Any changes made in the Senate would force the bill back to the lower house, where it passed earlier this month.

The proposal, together with separate legislation that reduces some pension benefits, would save the government an estimated 14.5 billion reais ($4.8 billion) a year. The pension bill, which also expires June 1, may go before the Senate next week.

Levy also faces a May 22 deadline to announce the amount of spending he will freeze out of this year’s budget. Levy’s cuts and his austerity bills in Congress still may not be enough to meet this year’s fiscal targets, a government official with direct knowledge of the discussions said.

Levy met Thursday morning with Vice President Michel Temer, who was designated by Rousseff to mend her fractured coalition in Congress.

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