Brazil Austerity Stirs Backlash But Temer's Allies Press On

(Bloomberg) -- Brazil President Michel Temer is facing growing pressure over his proposed pension overhaul after a general strike, protests and an opinion poll showed how deeply unpopular he and his reform agenda are.

Concerned that his ruling coalition may not have enough votes to approve the pension bill in the lower house of Congress, Temer held a meeting with his key lieutenants late on Monday to discuss delaying a first vote in a special lower house committee this week. For now, the government will stick to its schedule, four of Temer's allies told Bloomberg.

There's "no way" the lower house's special pension reform committee vote will be delayed, the bill's rapporteur, Arthur Maia, said in a text message on Tuesday. He echoed statements to Bloomberg by Lower House President Rodrigo Maia that the vote will happen May 3.

Initial market euphoria since Temer took office just over a year ago has given way to rising concern that his reform agenda could stall as both lawmakers and citizens grow weary of austerity measures without seeing any signs of recovery from the worst recession on record. The unpopular proposal to curb pension outlays is key to boosting public finances, restoring investor confidence, and paving the way for Brazil to eventually recover investment grade credit rating status.

Discussion of the bill will be concluded today, pension reform committee head Carlos Marun told reporters in Brasilia on Tuesday. The legislation will be approved by the full lower house floor this month, he said.

Labor unions staged nationwide protests against Temer's policy agenda that shuttered schools and brought public transportation to a halt on Friday. While more demonstrations are likely in coming weeks, they are unlikely to derail the administration's reform plans, political risk consultancy Eurasia said.

At stake is a constitutional amendment that government officials say would save 630 billion reais ($197.5 billion) in the next ten years, based on the latest proposal. The legislation's detractors say it would strip Brazilians of their constitutional rights by restricting their access to guaranteed social benefits.

While the government is confident it has the votes to pass the pension bill in the lower house committee, it needs to win over more supporters to succeed on the floor, according to one official aware of Temer's thinking, who requested not to be named because the discussions were private.

--With assistance from Gabriel Shinohara

To contact the reporter on this story: Simone Preissler Iglesias in Brasilia at spreisslerig@bloomberg.net.

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Matthew Malinowski, Raymond Colitt