• A long-awaited policy desired by the  Brazilian government and market, the Social Security Reform’s main text was approved in Congress yesterday night
• Its approval might save BRL 933 billion over the next 10 years

Four and a half months after President Jair Bolsonaro government’s submitted the proposal to the Brazilian Congress, the long-awaited and controversial Social Security Reform was approved during the first round on Wednesday night at the House of Representatives with 379 votes, 131 opposed and no abstentions.

Although the approval was expected, the wide margin of votes in favor came as a surprise. According to Brazilian legislation, this reform is a constitutional amendment, which means that the minimum number of votes needed is 308. The government expected to reach up to 355 votes, Civil Affairs Minister Onyx Lorenzoni said to Exame.

Considered as the main measure to reduce costs and reverse the long journey of deficits and rising public debt, if the reform remains unchanged, it should mean a saving of BRL 933 billion for the national treasury over the next 10 years.

The main text of the social security reform establishes a minimum age for retirement (65 years for men and 62 years for women), limits the retirement benefit to the average of all wages, raises the contribution rates for those who earn above the INSS (Social Security Entity) maximum and establishes rules of transition for current employees. What has changed from the initial government’s proposal is that modifications in the retirement of small producers and rural workers were left out, according to media outlet InfoMoney.

Also read: A Vote that Can Change Brazil

The next steps have to do with further approvals, which should happen after the parliamentary recess in the next few days. Only after these approvals will the reform, become a real law.

Regarding market reception, the dollar decreased 1.3% yesterday, the biggest daily drop in almost a month and a half, reaching the lowest level since the end of February; and the Brazil Stock Market Index (IBOVESPA) also attained a new record, reaching 105,817.06 points.