March 10, 2016 / 1:12 PM / in 2 years

Brazil reform agenda to hinge on political crisis: minister

BRASILIA (Reuters) - The Brazilian government will monitor political tensions before deciding whether to move ahead with a controversial bill to reform Brazil’s pension system in April, Pension and Labor Minister Miguel Rossetto told Reuters.

Rossetto, a senior Workers’ Party member, said the reform agenda was important but could be delayed by the political crisis following Friday’s detention of the party’s founder and former president, Luiz Inacio Lula da Silva, in a corruption investigation.

Lula’s brief detention for police questioning has emboldened opposition calls for the ouster of his handpicked successor, Dilma Rousseff, who is scrambling to pull Brazil out of its worst recession in decades.

“We will evaluate. It is obvious we have to assess the political dynamics after what happened on Friday,” Rossetto said. “The government is not interested in a conflictive agenda.”

A day earlier, Finance Minister Nelson Barbosa told Reuters the government would stick with plans to submit the pension overhaul in April despite the political crisis.

Barbosa said he disagreed with a proposal to charge social security benefits on commodity exporters, but Rossetto said that option could not be ruled out yet.

The disagreements highlight a lack of consensus within the administration to put together a pension reform that has been opposed by powerful pro-Rousseff unions.

Rousseff has been torn between market demands for further austerity and political allies who favor additional public spending to rescue the economy.

Union leaders, business groups and government officials started talks last week to draft the pension reform bill, which the administration promised to deliver in April. It remains uncertain whether it will include a minimum retirement age, Rossetto said.

Many Workers’ Party lawmakers have publicly criticized Rousseff for her plans to reform Brazil’s costly pension system, fearing a reduction in the benefits of future retirees.

However, Rossetto said the party was united in helping Rousseff weather attacks by coup-mongers in the opposition that have paralyzed Congress.

“She is one of the biggest leaders of our party,” the minister said.

He said the government was concerned with the prospect of violence during anti-government rallies across the country called by the opposition for Sunday.

He also said a recent market rally on hopes Rousseff will be ousted is likely to be temporary.

“Speculators will lose money,” he said.

Additional reporting by Lisandra Paraguassu and Daniel Flynn; Editing by Bernadette Baum

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