| BRASILIA, June 12
BRASILIA, June 12 The acquittal of Brazilian
President Michel Temer last week on charges of illegal campaign
funding in the 2014 election has emboldened the center-right
leader to offer no more concessions to Congress that would
weaken his austerity package, a senior member of the economic
team and an aide told Reuters.
Brazil's top electoral court dismissed a case that could
have removed Temer from office, but the president is still
threatened by a separate corruption investigation.
Temer and his economic team, despite the uncertainty, are
confident the government's coalition will approve a pension
overhaul to avoid a fiscal crisis in Brazil, which is struggling
to rebound from a two-year recession.
Temer, who became president a year ago when his leftist 2014
running mate Dilma Rousseff was impeached, has refused to resign
but has said he would not run for re-election next year.
Members of the coalition government fear that failure to set
the economy on the road to recovery will damage their election
campaigns and the chance that a member of their own party could
take the presidency.
"The government has yet to see how the alliance reacts in
the next few weeks," the economic team official said. "But it is
not rational not to approve the reforms now ... if congressmen
dilute the reform they will shoot themselves in the foot."
Temer's team will not budge on the proposal that sets a
minimum retirement age and cuts pension benefits, a deeply
unpopular measure, the official and a Temer aide said.
Both spoke on condition of anonymity.
The government is also sticking to plans to streamline tax
rules in the second half of the year, the official said.
He added that the relative stability of Brazilian assets
mirrors market confidence that Latin America's biggest economy
will pass the pension proposal that was put on ice after Temer
was placed under investigation for corruption by the Supreme
Court last month.
After nearly splitting with Temer, his main allies are
poised to stay put after his acquittal and have vowed to endorse
the reforms. Last week, Temer's proposal to modernize labor
rules was approved by a Senate committee.
"We cannot undermine a government plan that is crucial for
the economic recovery," said Jose Anibal, a leader with Temer's
main ally, the Brazilian Social Democracy Party (PSDB).
Some PSDB lawmakers and other members of the coalition,
however, have told Reuters the government will need to water
down the pension proposal, as it needs approval by three-fifths
of congress to pass.
The president's economic team led by Finance Minister
Henrique Meirelles, a former central bank chief widely praised
by markets, plans to remain even if Temer is forced out.
"We believe the president will stay in office until the end
of his term. But if something happens we are all committed with
the reforms," the official said.
To show that commitment the economic team will push for a
few changes to the tax system that they believe would make the
economy more efficient without giving up revenues.
Tax measures under consideration include changes to
value-added federal and state duties such as PIS/COFINS and
ICMS. Taxation of financial products such as asset-backed
securities LCA and LCI are also being discussed, the official
(Reporting by Silvio Cascione and Alonso Soto; editing by Grant