| BRASILIA, March 15
BRASILIA, March 15 Brazil's president and senior
lawmakers were unwavering in their support for a major pension
reform on Wednesday despite nationwide protests against the
proposal and the dramatic expansion of a graft probe threatening
the ruling coalition.
Moody's Investors Service added a vote of confidence in the
government, citing the ongoing progress of fiscal reforms as a
reason for revising its outlook for Brazil's sovereign credit
rating to "stable" from "negative."
Brazil's currency and benchmark stock index
both rose around 2.0 percent on Wednesday, leading a rally in
Latin American assets after the U.S. Federal Reserve signaled a
gradual pace for interest rate rises.
Wednesday's developments underscored that the political
momentum is still in President Michel Temer's favor as he pushes
ahead with an unpopular austerity agenda that has drawn
opposition into the streets but retained the support of
The public backing from legislative allies was particularly
important after Brazil's top public prosecutor moved on Tuesday
to target dozens of senior politicians as part of a corruption
probe centered on kickbacks at state oil company Petrobras.
Despite the snowballing investigation and well-organized
union resistance, Thomaz Favaro, a political analyst with global
consultancy Control Risks, said Temer has built a more robust
coalition than his predecessor, Dilma Rousseff, who was
impeached last year as the Petrobras scandal gained steam.
"The coalition behind Temer has proven to be more stable
than Dilma's and will continue to be so despite corruption
investigations, due to the degree of ideological affinity that
unites it on business initiatives and concern for Brazil's
fiscal position," he said.
Brazil's prosecutor general reportedly named five members of
Temer's cabinet and his most senior congressional allies in
motions before the Supreme Court, but those same senior
lawmakers said on Wednesday they were pressing on with reforms.
Asked if the scandal would interfere with the legislative
calendar, Senate President Eunicio Oliveira and House Speaker
Rodrigo Maia said nothing had changed. Both said investigations
would give a chance to clarify allegations in the press.
Their steadfast support contrasted with rowdy demonstrations
that occupied the finance ministry in the capital Brasilia and
snarled traffic in the business hub of Sao Paulo to protest
Temer's proposed reforms.
The impact of a strike by public transportation workers was
lighter than anticipated in Rio de Janeiro and other smaller
Still, an afternoon march drew tens of thousands to a
midtown thoroughfare in Sao Paulo, highlighting well organized
union resistance to limiting pension benefits and raising the
retirement age as the government has proposed.
A smaller demonstration in Rio was marked by clashes between
masked protestors and police, who used tear gas to control the
Temer told small business owners in Brasilia on Wednesday
that pension reform was essential to lifting the economy from
its worst slump on record and closing a huge fiscal deficit
before it triggered an even deeper crisis.
"We can't do something too modest now or in four or five
years we'll have to follow the example of Portugal, Spain,
Greece and other countries that had to make a much bigger cut
because they didn't take preventative measures," he said.
Moody's said it expected Temer's pension reform to pass
Congress in the second half of 2017.
(Reporting by Anthony Boadle and Lisandra Paraguassu;
Additional reporting by Maria Carolina Mello and Marcela Ayres
in Brasilia, Pedro Fonseca and Rodrigo Viga Gaier in Rio de
Janeiro, writing by Brad Haynes; editing by Daniel Flynn)