UPDATE 2-Brazil's lower house approves pension overhaul to tackle budget gap

Brazil's lower house of Congress on Wednesday approved a far-reaching pension overhaul bill aimed at reducing a huge budget gap, with the central economic reform proposed by far-right President Jair Bolsonaro now advancing to the Senate. The government says the bill will save the public purse 933 billion reais ($235 billion) over the next decade.

The text had already been approved by the lower house, 379 to 131, in July. However, under Brazilian law, the text requires two votes in both the lower and upper houses, as it includes changes to the federal constitution. In the second round, the controversial bill passed by a vote of 370 to 124 early on Wednesday, and the chamber later rejected eight amendments that were proposed mainly by its opponents and would have substantially reduced the fiscal savings.

Economy Minister Paulo Guedes went to Congress to thank lawmakers for passing his reform bill and told reporters he expects its passage through the Senate to be smooth. "This reform changes the history of Brazil," Guedes said.

The bill raises the minimum retirement age and reduces some workers' benefits, lowering the cost of a generous social security system that has become unsustainable and was fueling Brazil's rising public debt. Economists say solid economic recovery in Brazil depends on this reform, but it has faced stiff opposition since it will mean Brazilians must work longer for their pensions. Still, most lawmakers decided the deficit problem had to be tackled.

The Senate is expected to approve the bill in September. ($1 = 3.9684 reais)

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