January 3, 2019 / 3:22 PM / in 6 months

Brazil will do pension reform, studying privatizations: Bolsonaro aide

BRASILIA (Reuters) - A senior aide to new Brazilian President Jair Bolsonaro stressed on Thursday the new administration’s commitment to enacting an ambitious pension overhaul, adding that a privatization program was still under evaluation.

FILE PHOTO: Onyx Lorenzoni, the future presidential chief of staff, arrives for a meeting with President-elect Jair Bolsonaro at the transition government building in Brasilia, Brazil December 11, 2018. REUTERS/Adriano Machado

The president, sworn in on Tuesday, had a productive first meeting with his full cabinet, and by early next week each minister should announce their top immediate priority, said Bolsonaro’s chief of staff, Onyx Lorenzoni.

The far-right president has promised to liberalize Brazil’s hidebound economy, rid the country of “socialism,” quell violent drug gangs and enact conservative social measures in areas like education.

On Wednesday, Bolsonaro unveiled plans to step up privatizations, toughen prison sentencing guidelines and hand control over indigenous land claims to the powerful Agriculture Ministry. Investors reacted with delight.

On Thursday afternoon, Brazil's real currency BRL= was up about 1 percent against the dollar, while the country's Bovespa stock index .BVSP fell around 1 percent.

Bolsonaro’s administration is made up of free market economists, statist former military generals, and religious ideologues, and it remains to be seen just how committed he is to liberalizing the economy.

Nonetheless, Bolsonaro tweeted on Thursday morning that privatization of 12 Brazilian airports and 4 ports should attract 7 billion reais ($1.85 billion) in initial investment. He did not give further details.

One of the biggest advocates of mass privatizations, Economy Minister Paulo Guedes, used his swearing-in speech on Wednesday to pledge to reduce taxes and overhaul the country’s costly social security system.

Guedes also said he planned to cut Brazil’s tax burden to 20 percent of gross domestic product from 36 percent, free the credit market from overcrowding by state banks, and reduce protectionism.

One of Guedes’ top allies, fellow free-market economist Roberto Castello Branco, was due to be sworn in later on Thursday as the new chief executive of Brazil’s Petroleo Brasileiro SA (PETR4.SA). Investors will be looking for signals of what he intends to do with the oil giant, Latin America’s largest company.

Despite walking back an earlier view that the state-run firm should be privatized, Castello Branco has indicated he remains laser-focused on an ambitious divestment program, aimed at cutting Petrobras’ staggering net debt, which stood at $73 billion as of the third quarter.

Reporting by Ricardo Brito; Writing by Gabriel Stargardter; Editing by Chizu Nomiyama and Frances Kerry

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