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Brazil economy minister promises to quit if pension reform is not robust enough

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Brazil economy minister promises to quit if pension reform is not robust enough

Brazilian Economy Minister Paulo Guedes said he would step down if his team's sweeping pension reform proposal either fails to pass or is diluted too much in the congressional process.

In an interview with Veja, a Brazilian magazine, the former investment banker argued that passage of legislation that results in anything less than 800 billion reais in savings would be only a temporary patch. His initial proposal promised some 1.2 trillion reais in cost savings over a decadelong period.

"If legislators approve something that represents less than 800 billion reais in savings, there is no possibility of launching a new pension [system]. We would only be mending the old one," he said.

If that threshold is not met, Guedes said he would not stay in his government position. "I'm going home. ... I'll catch a flight and go live abroad. I'm old enough to retire," he was quoted as saying.

The minister nonetheless underscored President Jair Bolsonaro's commitment to the reform. By sending the bill to Congress, "the president did his part," he said.

"There is a consensus on the need for reforms. Now, [what] we are missing is the most important thing: politics," he reportedly said.

The Brazilian economy saw a slowdown in the first quarter, which several analysts attributed to delays in moving the pension reform through the legislative process.

Should a strong version of the bill pass through Congress, Guedes said, growth revisions will be made since it will provide fiscal clarity and "trigger inflows of domestic investment and external savings."

As of May 23, US$ 1 was equivalent to 4.04 Brazilian reais.