BRAZIL - Social Projects to Remain Untouched by Budget Cuts - Lula
www.oneworld.net Mario Osava
RIO DE JANEIRO, Feb 10 (IPS) - The austerity efforts to be implemented by Brazil's new government, stricter than those the previous administration agreed with the International Monetary Fund (IMF), will not affect social programmes, President Luiz Inácio Lula da Silva assured a Monday Cabinet meeting.
Brazil's economic officials decided to boost the primary surplus goal for this year -- the difference between non-finance public income and spending -- to 4.25 percent of gross domestic product (GDP).
The agreement that the government of Fernando Henrique Cardoso (1995-2003) signed in September with the IMF for a 30-billion- dollar loan set the surplus goal at 3.75 percent GDP.
The increase announced by the Lula administration is an attempt to keep the public debt at December levels, or just below 56 percent of GDP, with sights on neutralising the effects of the 2002 financial crisis, including currency devaluation and increased interest rates.
The budget drafted by the previous administration and approved in December by Congress ''underestimated spending by 8.9 billion reais (2.5 billion dollars),'' presidential spokesman André Singer reported.
As such, the budget cuts for this year will have to total 14 billion reais (3.9 billion dollars), according to the figures presented to the Cabinet by Guido Mantega, Budget and Planning minister.
Nevertheless, Lula asserted that the cuts will not affect the social programmes he announced upon taking office, such as Zero Hunger, to provide benefits to a million families this year; First Employment, an initiative to provide job opportunities for young adults; and the legalisation of previously unregulated housing in the marginalized neighbourhoods, known as 'favelas', in Brazil's big cities.
The social arena has ''absolute priority'', said the president after instructing the ministers to cut non-essential expenditures and to improve administrative efficiency.
Lula's emphasis that the social programmes will not be touched by the budget adjustments is evidently a response to the criticisms he received from the more staunchly leftist sectors of the Workers Party (PT).
The president and most of his ministers are members of the PT, but they came under fire for following what some in the party describe as the ''neoliberal economic policies of Cardoso.''
Some of the more radical PT leaders, such as legislative deputy Joao Batista Araujo, believe that extending the public spending cuts beyond the level demanded by the IMF places Brazil's economic growth in jeopardy and will increase hardships for the population.
The ministerial meeting Monday, the second since Lula took office Jan 1, also served to define the goals of each ministry for this year and to provide more details on dozens of measures aimed at specific economic and social sectors.
On March 21, International Day against Racism, the Brazilian government will inaugurate the Racial Equality Secretariat, whose mission will be to promote initiatives to benefit the country's black and indigenous populations.
Spokesman Singer also announced measures to stimulate business cooperatives and micro-credit institutions, which are to help some two million small enterprises.
Furthermore, minimum prices for milk will be set; a move intended to help out Brazil's struggling dairy farmers.
With an increase in available credits, the government hopes to target family farms in particular, stimulating maize and sorghum production during the upcoming Southern Hemisphere winter to prevent a shortage of these grains, and to mitigate the need to import them.
Among the other social measures discussed at the Cabinet meeting were the creation or expansion of six indigenous reserves and the expropriation of 203,000 hectares of fallow land to be settled by 5,500 landless peasant families.
The government also will set up 4,200 computer terminals in post offices across the country. Each person will have the right to 10 free minutes of time on-line per visit, which the Lula administration says will foster the Brazilian population's ''digital inclusion''.
All of the resolutions taken Monday are relatively limited for a country of 175 million people, with a third living in poverty and approximately 4.8 million rural families without land to farm.
The measures are unlikely to quell all of the criticisms coming from the opposition or from within the PT about the economic policy, which experts say is not very different from Cardoso's.
Minister José Dirceu, chief of policy coordination for the presidency, admits that the government must try to overcome the currency exchange crisis inherited from the previous administration in addition to preparing for the economic difficulties that would arise from the potential U.S.-led war against Iraq.
An attack on Iraq would feed the existing inflationary pressures because oil prices would rise and the flow of capital to Brazil would slow, forcing the Lula administration to raise interest rates to the detriment of economic growth, agree economic analysts.