By Lise Alves, Senior Contributing Reporter
RIO DE JANEIRO, BRAZIL – Turbulence between Brazilian officials led the financial market to tense up in the final hours of trading on Wednesday, with Brazil’s stock market falling by 3.57 percent and the U.S. dollar appreciating 2.27 percent in relation to the Brazilian real.
The deterioration of the economic indicators was a reaction to Economy Minister Paulo Guedes’ statement that he would not leave the government after a first defeat, but that he would step down if his agenda was not supported by the President of the Republic or Congress.
“I come to help; (if) the president does not want to, (if) Congress does not want to, do you think I’m going to fight to stay here?” Guedes asked senators at the Senate Economic Affairs Committee hearing on the government’s social security reform bill.
“I’m here to serve you. I have no attachment to the position, (or) desire to stay at any cost,” concluded Guedes. During the hearing the minister had a shouting match former Agriculture Minister, Katia Abreu.
The approval by Congress of the social security bill is seen as crucial by the Bolsonaro administration. Without it, says the President’s economic team the country will go bankrupt.
The bill however, has suffered widespread criticism. Some have criticized the significant changes to be made, for example, on benefits of rural workers, while others say not enough changes have been made on the military personnel benefits.
Bolsonaro’s economic team had hoped that the bill would pass through the lower house by mid 2019 and be approved by the Senate by the end of the year, but analysts now say that substantial changes to the bill are likely in both houses and the approval of the reform should take longer than expected.
São Paulo’s Bovespa Index, which had reached 93,000 points around 2:30p.m., begun a downward spiral, falling to 91,000 points, after the start of Guedes’ speech.
The U.S. dollar closed the day at R$3.954/US$1, highest since October 1st, 2018.