Brazil

The Brazilian senate's approval of a pension reform bill in late March marks a small step towards fiscal consolidation, while reinforcing our view that President Dilma Rousseff will take a more pragmatic approach to policymaking this year. While pensions currently replace 70% to 80% of average income, the bill will cap monthly benefits, helping to reduce the publically-funded pension burden. That said, given pressures on expenditures from fiscal stimulus and the country's growth acceleration programme, we are unlikely to see significant fiscal consolidation before 2014

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