Brazil sets budget cuts, equality program

www.upi.com By Carmen Gentile UPI Latin America Correspondent From the International Desk Published 2/10/2003 7:52 PM

SAO PAULO, Brazil, Feb. 10 (UPI) -- Brazil's president convened his full Cabinet Monday as part of a 40-day gut check for his fledgling administration and to announce a series of economic and social reform measures.

Capping a weekend described by one newspaper as a "diagnostic of the federal machine," Luiz Inacio Lula da Silva, for only the second time since assuming the presidency Jan. 1, brought his entire Cabinet together to reveal to Brazilians the next phase for his administration.

The president of the leftist Workers' Party, known as PT, has quieted most of his critics up to this point with a series of relatively conservative moves on the monetary front, while making good on a pledge to work toward greater social equality in South America's largest nation.

"He (Lula) has determined that the administration is doing well," said presidential spokesman Andre Singer following Monday's meetings that proceeded a number of new announcements by the administration.

Despite Lula's optimism, said Singer, the Brazilian leader remains concerned about the nation's flagging economy, although he wants to continue with his social agenda, saving it from budget cuts.

That said, the administration did, however, announce that it would "hold back" $14.1 billion reals (almost $4 billion) already earmarked for the 2003 federal budget in order to meet the primary surplus goal for the year.

Brazil recently raised its surplus goal to 4.25 percent, up from 3.75 percent.

Singer added that as it is not a "budget cut," the funds could be spent later in the year if the Brazilian economy improves. The country's key economic indicator, the Bovespa, and its currency have been in a nearly yearlong slump along with global markets, and like U.S. markets, taken several recent hits based on concerns about the prospects of war with Iraq.

The cuts are not expected to affect Lula's top priority for reform since winning a landslide victory in October.

Dubbed "Fome Zero" (Zero Hunger), the project's initial goal is to assist 10 million people via an aggressive food allotment program over the next five years.

In fact, Lula went on to announce additional social reform moves, including the dispersion of some 203,000 hectares (more than 500,000 acres) of unproductive land in 17 states and the enlargement of some indigenous areas for Brazilian Indian tribes.

The president also went on to note the imminent creation of a new secretariat for racial equality.

Following the meetings in the capital, Brasilia, local media took the opportunity to ask the president's spokesman about whether his party's "radical" members were discussed during the meetings.

The PT radicals have been critical of Lula on several fronts, though mostly regarding his economic team, which has won kudos from both local and foreign investors for not deviating from the free-market policies implemented by former President Fernando Henrique Cardoso.

They insist that Minster of Finance Antonio Palocci and Central Bank President Henrique Meirelles have been far too conservative for the leftist PT.

Lula himself intervened on Friday in the ongoing spat among PT officials and other parties' members who are allied with him, taking the opportunity to defend his choices to lead Brazil's economy and other decisions made during his brief presidency.

Singer, meanwhile, noted that the radicals were not discussed, as the ministers would not be offended by the far-left members of the party.

"The ministers are very conscious of the measures that should be taken," said Singer, diplomatically refraining from further comment.