November 7, 2018 / 8:03 PM / 6 days ago

Brazil's Bolsonaro faces first fiscal setback as judges' pay rises

BRASÍLIA (Reuters) - Brazil’s President-elect Jair Bolsonaro faced the first setback in his plans to reduce the country’s massive deficit on Wednesday, as the Senate approved a 16 percent pay rise for the judiciary against his wishes.

Brazil's President-elect Jair Bolsonaro (R) and Brazil's President Michel Temer shake hands, at the Planalto Palace in Brasilia, Brazil November 7, 2018. REUTERS/Adriano Machado

The far-right politician was elected last month on a wave of anger over corruption and economic recession, which he and many voters blamed on the leftist Workers Party’s long reign in power.

Bolsonaro, who takes the reins on Jan.1, has begun naming key cabinet posts and laying out his vision for government, but, like other leaders before him, has found making changes in Brazil may not be an easy task.

He told reporters that it was “not the moment” to approve pay hikes. But the Senate went ahead and passed a bill raising judges’ salaries, which serve as a benchmark for other public sector pay. This will add an estimated 4 billion reais ($1 billion) to next year’s deficit.

Bolsonaro’s campaign pledges to merge the agriculture and environment ministries have also gone awry.

As he named Congresswoman Tereza Cristina, the leader of Brazil’s farm caucus, to be his agriculture minister on Wednesday, he ditched his initial plan to merge the two portfolios.

The plan had faced opposition from environmentalists, who said it would lead deforestation to explode, and from the farm sector that feared it would strain trade relationships.

Cristina is an agronomist from the major farm state of Mato Grosso do Sul. She is the first woman to be named as a minister by Bolsonaro, who has a history of making misogynistic remarks.

Bolsonaro, who has said he wants to reduce the number of ministries, said on Wednesday he planned to merge the labor ministry with another, without providing details.

SECURITY PRIORITY

On his second day back in Brasilia as president-elect, Bolsonaro met with incumbent President Michel Temer to discuss prospects for what many say are urgently needed economic reforms.

Bolsonaro said this week he would discuss with Temer the need to push through a pension overhaul this year to bring the deficit under control.

At a news conference after the meeting, Temer said he had invited Bolsonaro to accompany him to the G20 summit from Nov. 30 to Dec. 1 in Buenos Aires, as part of the government transition.

Bolsonaro also promised on Wednesday to prioritize a solution for Brazil’s public security problems, a central plank in the former army captain’s platform that emphasizes law and order.

Augusto Heleno, the head of a group of retired army generals who backed Bolsonaro’s presidential bid, will take the top security position in the new cabinet, a spokesman for the transition team said on Wednesday. Heleno had previously been announced as the next defense minister.

Bolsonaro told reporters that the chief executive of state-controlled oil company Petroleo Brasileiro SA, Ivan Monteiro, was not expected to stay in the new administration.

But GloboNews TV channel later reported that Bolsonaro would keep Monteiro, who took the helm of the world’s most indebted listed oil company in June. Monteiro said Tuesday he was open to staying if invited.

Slideshow (5 Images)

Petrobras did not immediately respond to a request for comment.

Bolsonaro said he and his economic guru Paulo Guedes had not discussed the fate of central bank chief Ilan Goldfajn.

His foreign minister will be a career diplomat, he said.

Reporting by Ricardo Brito, Lissandra Paraguassú, Jake Spring, Anthony Boadle and Marcela Ayres in Brasilia and Marta Nogueira in Rio de Janeiro; Editing James Dalgleish and Rosalba O'Brien

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