Brazil Government Says Soc Sec Votes Likely Delayed To 2nd Half

sg.biz.yahoo.com Saturday March 1, 4:43 AM

BRASILIA -(Dow Jones)- Approval of a constitutional amendment for reform of Brazil's social security system will likely be delayed until the second half of this year, Brazilian government representatives said Friday.

Social Security Minister Ricardo Berzoini and governing Workers' Party Senate leader Aloizio Mercadante said a reform proposal under study by the government would likely be submitted for review in Congress only in April or May.

"The first half is an extremely short time frame," Berzoini said. "If we have a sufficient degree of consensus we could approve it by the end of the year."

Brazil's government had originally pushed for approval of the reform in the first half of the year.

The reform is seen as necessary for balancing Brazil's public sector accounts, which ended 2002 with a deficit of 4.38% of gross domestic product, or 61 billion reals ($1=BRL3.570). The public sector social security system alone produced a deficit of BRL71 billion, but this was partially offset by government surpluses in other areas.

The government's reform proposal, which seeks to restructure financing and benefits for public sector workers' pensions, is currently under study by president Luiz Inacio Lula da Silva's National Council on Economic and Social Development.

After submission to Congress, the proposal must spend 40 days in a special committee before going for two rounds of votes on the floor of the lower house. Upon approval in the lower house, the bill must be submitted for similar deliberations in the Senate.

Parallel to the government's reform proposal, Congress is also studying a bill that would cap government-paid benefits at BRL1561 per month and unify federal and regional pension systems under a mixed public and private defined contribution plan.

While many congressmen allied with the country's left-wing Workers' Party government disapprove of the congressional proposal, the government has not yet ruled out incorporating it into it's own reform proposal.

However, lower house President Joao Paulo Cunha sent Congress's alternative proposal back to committee this week for further study.

But as the government continues work on formulate its proposal, congressmen from opposition parties have begun to criticize it for delaying approval of a reform that stands to improve the country's investment climate.

"The government is losing political timing by waiting for a solution that is previously negotiated," said Liberal Front Party Senator and former Social Security Minister Waldeck Ornelas.

-By Gerald Jeffris, Dow Jones Newswires; 55-61-9965-6883; gerald.jeffris@dowjones.com