Brazil’s Finance Minister Henrique Meirelles will speak to major credit rating agencies on Thursday as the government scrambles to avoid a sovereign debt downgrade due to growing doubts that its proposed pension reform can rein in surging public debt.

A vote on the unpopular bill to overhaul the social security system, seen as vital to closing the fiscal deficit, has been delayed to 2018 after failing to muster support in Congress. Lawmakers have warned that handling the hot-button issue ahead of next year’s elections would reduce the chances of approval.

Meirelles said in a radio interview he will tell rating agencies the delay until February does not mean pension reform will not be approved. He told Radio Estadão it would be “reasonable” for the agencies to wait until the bill is voted on before deciding on a potential downgrade.

Lower house Speaker Rodrigo Maia on Monday said pension reform would be hard to approve if the bill is not passed by February. The first vote was put off last week and scheduled for Feb. 19 after the Christmas-to-Carnival holiday recess.

Maia told a news conference there is room to discuss a longer transition period for public sector employees, to include those who started working before 2003. While this would add to future pension costs, Maia said the government will refuse to give up one more penny in fiscal savings.

The current version of the bill would save 480 billion reais ($146 billion) over 10 years, according to government estimates, down from 800 billion reais in the original proposal, before concessions were made to try to win passage.

Brazil’s bloated pension system, which is especially generous for public sector employees, is the main cause of a huge budget deficit that cost Latin America’s largest nation its prized investment-grade credit rating two years ago.

The finance ministry said Meirelles will hold conference calls with rating agency representatives on Thursday.

Investors fear that failure to streamline social security could weaken Brazil’s recovery from a deep economic downturn, forcing the central bank to raise interest rates from an all-time low and triggering new sovereign rating downgrades in 2018.

Last week, Moody’s Investors Service calling the delay in voting on the pension bill “credit negative”.

“This raises the possibility that the reform will not be approved next year, given political uncertainty surrounding the presidential elections,” Moody’s said in a note to clients.

Source: U.S. News & World Report