May 13, 2015 / 11:50 PM / in 3 years

Brazil's lower house passes second austerity bill

BRASILIA (Reuters) - The lower chamber of Brazil’s Congress passed a bill on Wednesday toughening access to social security pensions, the second measure approved in a week to cut benefits in a drive to reduce a growing fiscal deficit.

The measure, which still has to clear the Senate, could save public coffers up to 7.5 billion reais ($2.47 billion) a year, mainly by curbing abuse in pension claims. It passed by 277 votes to 178.

A week ago, the Chamber of Deputies narrowly passed a bill tightening unemployment benefits in a test vote for President Dilma Rousseff’s efforts to balance Brazil’s fiscal accounts, avoid a credit downgrade and restore business confidence.

Both measures were opposed by the country’s largest labor union and some members of her Workers’ Party. They were watered down in Congress, reducing fiscal savings by about 3.5 billion reais to an estimated 14.5 billion a year.

Passage in the Senate will be easier, Senator Romero Jucá of the center-right PMDB, Brazil’s largest party and key partner in Rousseff’s governing coalition, told Reuters.

Brazil risks losing its prized investment-grade credit rating if it fails to put its finances in order.

Finance Minister Joaquim Levy is seeking to increase government revenues and cut spending to reach a fiscal savings goal of 1.2 percent of gross domestic product this year, up from a 0.63 percent deficit in 2014.

Reporting by Maria Carolina Marcello; Writing by Anthony Boadle; Editing by David Gregorio and Diane Craft

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