www.worldbank.org

February 27, 2003—The World Bank’s Board of Executive Directors yesterday approved a US$505 million Programmatic Human Development Sector Reform Loan for Brazil. The loan supports Brazil’s accelerated program of human development reforms. This program works to reduce hunger and poverty in Brazil by improving the quality and reach of public spending in education, health and social assistance. And it helps to protect the poorest and most vulnerable groups from the impacts of economic crises.

"The crucial question right now is how to get the most impact from social spending," said Vinod Thomas, World Bank Brazil Country Director. "The increased quality of public spending supported by the current effort is aimed at enabling Brazil to speed up human development while maintaining fiscal responsibility."

An especially positive aspect of Brazil’s human development sector reform program is identifying cross-cutting issues in education, health and social assistance and focusing on the important issues of accountability, governance, equity, quality and efficiency in public social spending.

This loan will supportthe recent substantial progress on social policies and outcomes. Over the recent years, Brazil has strengthened an innovative set of programs at the federal level to decentralize the delivery of social services, to place a floor on basic education and health spending, and to reduce inter-state and inter-municipality inequalities. It has also developed institutional mechanisms to coordinate and focus assistance to poor communities through a variety of programs to improve assistance for disadvantaged populations.

It will help to further the protection of budgets and monitoring of implementation of effective social policies during times of instability. In the face of macroeconomic instability, sound human development policies such as targeting, redistributing resources to benefit the poor, and making the allocation of resources transparent, are critical for guaranteeing continued growth and poverty reduction.

The encouraging messages from the new administration of President Luiz Inácio Lula da Silva have been coupled with the launching of important social sector initiatives. The Zero Hunger program, launched as a flagship program to fight hunger, supports the country’s health, education, and social protection agendas.

The new government has announced its commitment to decentralization, education evaluation, community empowerment and participation, and conditional cash transfer programs for the poor. Complementing this is the effort to promote quality growth, competitiveness and employment. The First Job program, to which the World Bank is following up with additional support, is a good example.

"Brazil is carrying out one of the greatest experiments in history of pursuing a bold social program with fiscal responsibility in an unusually tough external environment. This operation is one of the many ways the World Bank is supporting these efforts," said Vinod Thomas. "We will continue to work with the Government of Brazil for the common purpose of fighting poverty and inequality and bringing about socially and environmentally sustainable development in Brazil."

The World Bank’s current investment portfolio in Brazil includes 50 projects, totaling more than $4.5 billion in commitments. Since 1949, the Bank has made more than 300 loans and invested more than $32 billion to promote poverty reduction, social and economic development in Brazil. The World Bank Group, including the IBRD, IFC and MIGA, contemplates $6 billion up to $10 billion in new investments during the four years of this administration.

For more information on the World Bank’s work in the Latin America and Caribbean region, please visit: www.worldbank.org

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www.latintrade.com 02/28/2003 - Source: BNamericas Whether Latin America is on a leftward tilt is open to debate, but what is certain is that almost everywhere there is a move to review the privatisation drive of the 1990s, particularly in the area of public services. In most cases, the revision aims to start with a strengthening of the state's regulatory powers.

On 19 February, Brazil's President Lula da Silva outlined a get-tough approach in this area at a lunch with leaders of the ruling Partido dos Trabalhadores (PT). The main message was that the powers of public service regulators should be enhanced 'so as to better serve the interests of the state and the people.'

Roberto Jefferson, leader of the PT bloc in the chamber of deputies, said this was a reaction against what amounted to 'the outsourcing of political power in Brazil'.

The first step will be the submission of a bill to congress ordering a review of the regulatory agencies. Lula's mood, as summarised by Jefferson, is that these agencies have become 'a parallel power' with officials 'that even the President can't dismiss.'

This may be the most high-profile instance of the regionwide drift, but examples are on hand almost everywhere.

In Bolivia, in the recent cabinet reshuffle, President Gonzalo Sánchez de Lozada appointed Juan Carlos Virreira, who had served him earlier as trade minister, as presidential delegate in charge of auditing the performance of the companies operating the privatised public services.

It was under Sánchez de Lozada's first presidency (1993-97) that most of the privatisations were carried out.

In Argentina, the executive's hand is currently being forced by a judge, who has ordered the operator of a railway line, Transportes Metropolitanos General Roca, (andthe government) to start providing a 'worthy and efficient railway service [offering] minimal conditions of hygiene and security' within 30 days.

At least two of the contenders in the April presidential elections, Néstor Kirchner and Adolfo Rodríguez Saá, have been calling publicly for a review of privatisations in the oil and rail sectors.

In Peru last year, widespread protests forced the government to abandon a power privatisation drive. A similar mood prevails in neighbouring Ecuador. In Central America, where the FMLN feels that it may finally be heading for power, a review, if not rollback, of privatisations figures very high on their agenda.

www.voanews.com By Onka Dekker Broadcast: March 3, 2003 This is the VOA Special English Development Report

Organizers of the World Social Forum have chosen India as the meeting place in two-thousand-four. The conference has taken place in Brazil since it began three years ago. Last year, Indian activists organized a South Asian Social Forum in Gujarat state.

The number of delegates, observers, and reporters at the World Social Forum has increased each year. Organizers said more than one-hundred-thousand people gathered in Porto Alegre this year.

The meeting took place in Brazil at the end of January at the same time as the World Economic Forum in Davos, Switzerland. That is a yearly meeting of international business and political leaders.

Activists organized the social forum because they wanted an international gathering of anti-poverty campaigners. They also wanted a better way to protest than to march outside the World Economic Forum.

Supporters of free trade argue that such economic policies could help all nations. But the social activists say the rules of international trade and finance do not do enough to help the poor.

This year, Brazil’s new president Luis Inacio Lula Da Silva spoke to both gatherings. In Porto Alegre, the former labor organizer spoke of hungry children and his promise to feed everyone in Brazil. In Davos, Mister Da Silva asked the leaders to help end severe poverty in the southern part of the world.

Organizers of the social forum say it is designed to build friendships among activists. Delegates discussed ideas and projects in small groups. They could hear speakers translated into French, English, Portuguese and Spanish.

Organizers chose as the central idea for this year’s meeting, “Another World is Possible.” For six days people discussed everything from ways to increase women’s rights to methods to protect water quality.

Ethnic minorities called for an end to racism and for protection of native languages and cultures. Israeli and Palestinian activists met to develop a joint peace declaration. At the same time, though, other Jewish campaigners said there was an anti-Israel and anti-Jewish atmosphere in Porto Alegre.

On the last day, there was a protest march against war in Iraq and against the proposed Free Trade Area of the Americas.

Some say the World Social Forum is less an event than a process. Organizers say the desired result is free and open debate of ideas, not choosing a leader or approving a final declaration.

This Development Report was written by Onka Dekker.

www.upi.com By Bradley Brooks UPI Business Correspondent From the Business & Economics Desk Published 2/28/2003 4:09 PM

RIO DE JANEIRO, Brazil, Feb. 28 (UPI) -- Drug gangs have incinerated 55 city buses since Monday, detonated a small bomb on the famed Ipanema beach, strafed businesses with bullets, and generally terrorized this city in the days just before Carnival.

One might expect this to have a devastating effect on this city's ability to bring in the 500,000 tourists it is hoping to attract to the everything-goes festival for which it is best known.

But despite making international headlines for what amounts to a full-scale war between the drug gangs and police, Carnival 2003 looks like it will be as packed as ever, with no hotel vacancies in sight.

"We've always had violence and we've always had Carnival, and it hasn't stopped tourists before," said Margareth Belsito, who runs a tourism agency in Copacabana and oversees the rental of 98 apartments -- all booked this year.

"We were more worried about what a war with Iraq would do to tourism."

Despite the confidence that the show will go on, Brazil's federal government sent 3,000 army and navy troops to patrol the streets of Rio de Janeiro, which they began doing at mid-day Friday.

The troops will remain in the city until at least Wednesday, once Carnival is complete.

The citizens of Rio de Janeiro "cannot remain hostages of organized crime," President Luiz Inacio Lula da Silva said Thursday in announcing that he was sending in the troops.

About 10 people have been killed in the shootouts between the gangs and police this week. The drug gangs often force businesses in the city to shut down for the day, as a show of force to the government.

Businesses that don't comply with the order are at times riddled with bullets, as a few supermarkets have been this week.

Belsito pointed out that historically the drug gangs, which control the favelas -- or, slums -- in this city of six million have allowed Carnival to proceed without interruption.

In fact, the drug lords have been known to be quite benevolent when it comes to financially supporting the various samba schools, whose garrulous costumes and floats are the highlight of the events.

But, many fear, this year may be different.

The recent violence in Rio has largely been sparked by the decision to transfer the city's most notorious drug lord from a prison in Rio de Janeiro to one in neighboring Sao Paulo state, where he cannot communicate with his lieutenants.

Luiz Fernando da Costa, the leader of the Red Command gang who is better known as Fernandinho Beira-Mar, or Seaside Freddie, was moved because officials had gotten word that he was set to order a series of attacks to be carried out during Carnival.

"We're going to take all these traffickers out of Rio, those who have participated in this wave of attacks," Josias Quintal, secretary of public security for Rio de Janeiro, said of the incarcerated drug lords. "We're going to send them far away."

For their part, business leaders in Rio de Janeiro -- who lost about $15 million in commerce this past Monday when they were forced to shut their doors by the traffickers -- want to see the police occupy the slums where the drug gangs are based.

Leaders of the biggest business groups are also planning to unveil in the week following Carnival a plan that combines police action with social advances for the slums, all in the hopes of diminishing the pull the drug gangs have in employing impoverished youth.

Bill Hinchberger, the editor of BrazilMax, a Web site aimed at the gringo audience in Brazil, said he hadn't heard of anyone not coming to Carnival because of the violence.

"People abroad are following this, especially since the violence is happing on the eve of Carnival," he said.

Which is, most likely, the reason it is having little effect on the crescendo of Rio's tourism season, he said.

"Once somebody has bought their ticket -- the cheapest is $700 -- they've made hotel reservations, they've bought a ticket to the parade, they've invested a lot of money in this already," Hinchberger said.

"To go and cancel the thing is going to be a big decision for them. I'm sure there are cases of people doing that. But I don't think there is a rush to cancel trips."

Rio de Janeiro's state-run tourism office, Riotur -- which, certainly, has every reason to paint the best picture it can of Carnival -- said everything is going as planned for the event.

"There are very few hotel vacancies, Rio is full," said a representative with the state-run travel agency Riotur who asked that her name not be used. "Tourists aren't us anything about the violence, they only ask about Carnival."

Josephine Smith, a 21-year-old tourist from Sweden who spent the previous six months in Bolivia, said she was concerned about the violence.

"For the first time in my life, I've decided to take an organized tour," she said. "I know a lot of people in Sweden who are going to Asia rather than South America, as it's too dangerous."

sg.biz.yahoo.com Saturday March 1, 4:43 AM

BRASILIA -(Dow Jones)- Approval of a constitutional amendment for reform of Brazil's social security system will likely be delayed until the second half of this year, Brazilian government representatives said Friday.

Social Security Minister Ricardo Berzoini and governing Workers' Party Senate leader Aloizio Mercadante said a reform proposal under study by the government would likely be submitted for review in Congress only in April or May.

"The first half is an extremely short time frame," Berzoini said. "If we have a sufficient degree of consensus we could approve it by the end of the year."

Brazil's government had originally pushed for approval of the reform in the first half of the year.

The reform is seen as necessary for balancing Brazil's public sector accounts, which ended 2002 with a deficit of 4.38% of gross domestic product, or 61 billion reals ($1=BRL3.570). The public sector social security system alone produced a deficit of BRL71 billion, but this was partially offset by government surpluses in other areas.

The government's reform proposal, which seeks to restructure financing and benefits for public sector workers' pensions, is currently under study by president Luiz Inacio Lula da Silva's National Council on Economic and Social Development.

After submission to Congress, the proposal must spend 40 days in a special committee before going for two rounds of votes on the floor of the lower house. Upon approval in the lower house, the bill must be submitted for similar deliberations in the Senate.

Parallel to the government's reform proposal, Congress is also studying a bill that would cap government-paid benefits at BRL1561 per month and unify federal and regional pension systems under a mixed public and private defined contribution plan.

While many congressmen allied with the country's left-wing Workers' Party government disapprove of the congressional proposal, the government has not yet ruled out incorporating it into it's own reform proposal.

However, lower house President Joao Paulo Cunha sent Congress's alternative proposal back to committee this week for further study.

But as the government continues work on formulate its proposal, congressmen from opposition parties have begun to criticize it for delaying approval of a reform that stands to improve the country's investment climate.

"The government is losing political timing by waiting for a solution that is previously negotiated," said Liberal Front Party Senator and former Social Security Minister Waldeck Ornelas.

-By Gerald Jeffris, Dow Jones Newswires; 55-61-9965-6883; gerald.jeffris@dowjones.com