news.ft.com By Raymond Colitt in São Paulo Published: February 11 2003 4:00 | Last Updated: February 11 2003 4:00

The Brazilian government announced draconian cuts in this year's budget yesterday but sought to highlight efforts to resolve social and economic problems with a series of emergency measures.

In the latest sign of tough fiscal discipline since President Luiz Inácio Lula da Silva took office on January 1, the government said it was freezing R$14bn (£2.4bn) in expenditure this year.

Andre Singer, Mr Lula da Silva's spokesman, did not say where cuts would be made but insisted social welfare projects would be spared, blaming the previous government for a R$8.9bn underestimate of expenditure.

More than R$5bn in cuts are to increase Brazil's primary budget surplus target - its budget savings excluding interest payments on public debt - to 4.25 per cent of gross domestic product this year. Last August, Brazil agreed a 3.75 per cent target with the International Monetary Fund.

The increased primary budget surplus will allow the government to service its net public debt of R$881bn, or 56 per cent of GDP.

Meanwhile, an IMF mission arrived yesterday to evaluate Brazil's compliance with a $30bn loan package agreed last August. The previous government drew on $6bn of that loan. IMF officials welcomed the revised fiscal target. "This shows again the new government's commitment to a comprehensive and sustainable economic and social programme," IMF officials said.

But Mr Lula da Silva's austere economic policy has come under fire from unions and leftwing radicals in his Workers' party (PT). To assuage critics, the government announced yesterday a package of measures to point up efforts to tackle economic and social problems in spite of the tight budget.

Among the measures are tax breaks for co-operatives, financing for this year's cereal harvest, guaranteed government prices for dairy farmers, and incentives for private banks to increase lending to small farmers.

The government will also expropriate more than 200,000 hectares of fallow land to settle 5,500 poor families by the year-end and will expand and demarcate native Indian territories.

Other measures include authorising public power companies to participate in a tender to build 1,672km of transmission lines, increase scientific research grants, and install 4,200 computers to give citizens limited free internet and e-mail access.

www.falkland-malvinas.com Tuesday, 11 February

The Brazilian government announced draconian cuts in this year's budget on Monday but sought to highlight efforts to resolve social and economic problems with a series of emergency measures.

In the latest sign of tough fiscal discipline since President Luiz Inácio Lula da Silva took office on January 1, the government said it was freezing R$14bn ($3.9bn, €3.6bn) in expenditure this year. Andre Singer, Mr Lula da Silva's spokesman, did not say where cuts would be made but insisted social welfare projects would be spared, blaming the previous government for a R$8.9bn underestimate of expenditure.

More than R$5bn in cuts are to increase Brazil's primary budget surplus target - its budget savings excluding interest payments on public debt - to 4.25 per cent of gross domestic product this year. Last August, Brazil agreed a 3.75 per cent target with the International Monetary Fund.

The increased primary budget surplus will allow the government to service its net public debt of R$881bn, or 56 per cent of GDP.

Meanwhile, an IMF mission arrived on Monday to evaluate Brazil's compliance with a $30bn loan package agreed last August. The previous government drew on $6bn of that loan. IMF officials welcomed the revised fiscal target. "This shows again the new government's commitment to a comprehensive and sustainable economic and social programme," IMF officials said.

But Mr Lula da Silva's austere economic policy has come under fire from unions and leftwing radicals in his Workers' party (PT). To assuage critics, the government announced on Monday a package of measures to point up efforts to tackle economic and social problems in spite of the tight budget.

Among the measures are tax breaks for co-operatives, financing for this year's cereal harvest, guaranteed government prices for dairy farmers, and incentives for private banks to increase lending to small farmers.

The government will also expropriate more than 200,000 hectares of fallow land to settle 5,500 poor families by the year-end and will expand and demarcate native Indian territories.

Other measures include authorising public power companies to participate in a tender to build 1,672km of transmission lines, increase scientific research grants, and install 4,200 computers to give citizens limited free internet and e-mail access

daily.stanford.edu Dig Deeper By Waynn Lue Contributing Writer Tuesday, February 11, 2003 last updated February 11, 2003 12:46 PM

The last week in January saw Stanford students, faculty and alumni traveling to the ideologically opposed World Economic Forum and World Social Forum in the equally disparate locations of Switzerland and Brazil, respectively.

The WEF describes itself as an independent international organization that provides a collaborative framework for the world’s leaders to address global issues, and is particularly focused with engaging corporate members in global citizenship.

“The WEF holds an annual meeting every January in Davos, Switzerland, for business, political, non-governmental organization, civil society, academic, media and religious leaders,” said senior George Michalopoulos, who attended the WEF. “They discuss ongoing global issues — for example, the theme of this year’s annual meeting was ‘Building Trust,’ as a step towards better governance in all fields.”

On the other hand, the WSF was formed in direct opposition to the WEF, deliberately holding its annual conference on the same date as the WEF. The WSF is held in Porto Alegre, Brazil.

“The World Social Forum is a conference that was created to counter the pro-capitalist and elitist tendencies of the World Economic Forum,” said senior Meghana Reddy, who attended the WSF. “The people who started and participate in the World Social Forum believe that corporate heads, high-level government officials and other elites should not be the only ones making the decisions about the world economy but that the people — working-class people, people of color, women, immigrants, grassroots organizations, people who have been traditionally marginalized by the state and capitalism — should have a say in how the world economy is developed since they have been the ones most negatively impacted by capitalism.”

Not many students went to the WEF, which attracts only 2,000 — in contrast, around 200,000 attend the WSF.

However, “There were a number of Stanford alumni who attended the WEF — for example, [Cisco CEO] John Chambers and Carly Fiorina of H[ewlett] P[ackard],” Michalopoulos said.

Notables at the WEF included Secretary of State Colin Powell and other political figures.

Stanford community members who went to the conferences had many different reasons for attending, from prior involvement to personal beliefs and career opportunities.

“I had actually worked for the World Economic Forum’s media team at the European Economic Summit in Salzburg, and they asked me to come back to the annual meeting,” Michalopoulos said.

Senior Avinash Kaza, who attended the WSF, said, “The WSF is kind of like an NGO — non-governmental organization, also known as non-profit — summit, and I anticipate working on global poverty issues at an NGO in the future. The WEF is more like a business summit, with leaders from business and government.”

Even faculty had their reasons for attending the WSF.

“I have been to many conferences of progressive activists over the last few years, and this is currently one of the most important among international gatherings,” said Todd Davies, a symbolic systems lecturer.

Interestingly enough, despite the differences between the two conferences, some people like President Lula da Silva of Brazil attended both.

And students attending each conference felt that they received valuable experiences.

“There is a major disconnect between the classroom and the real world,” Kaza said. “To see the effects of globalization, it is necessary to go beyond the classroom and textbook and to actually meet and talk with some of the people affected. [Also,] many Stanford-affiliated individuals are or will be in the position to affect the lives of the poor across the world . . . it is important for us to see how our actions affect the lives of others globally.”

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.

www.forbes.com Reuters, 02.11.03, 8:44 AM ET BRASILIA, Brazil, Feb 11 (Reuters) - State-owned Banco do Brasil <BBAS3.SA>, Latin America's biggest bank, on Tuesday posted fourth-quarter and annual profits almost twice the size of the previous year thanks to strong credit growth. The Brasilia-based bank made a net profit of 600 million reais ($167 million) in October to end-December, compared with 332 million reais in the same period in 2001. Annual net profit rose 87 percent to 2.03 billion reais in 2002. Banco do Brasil's profits have forged ahead since it received a multibillion-dollar capital injection from the government in mid-2001 to unburden the bank of unprofitable farming and mortgage loans built up over years of politically motivated credit policies. Banco do Brasil also focused increasingly on commercial and retail operations which helped it buck sluggish growth by Brazil's economy due to high interest rates and a slowdown in the global economy. Banco do Brasil's credit portfolio grew 26.4 percent in 2002 to 63.1 billion reais, outperforming Bradesco <BBDC4.SA> (nyse: BBD - news - people), Brazil's largest private bank, whose portfolio rose 14 percent to 50.8 billion reais thanks largely to a spate of acquisitions. The bank's stock forged ahead 4.8 percent to 9.85 reais in early trade in Brazil. The country's benchmark Bovespa <.BVSP> stock index was 1 percent higher at the time. But the bank was not immune to Brazil's financial market turbulence as investors worried about the management of Latin America's biggest economy and state companies under the left-wing government of President Luiz Inacio Lula da Silva. In December, the state-owned National Economic and Social Development Bank (BNDES) was forced to cancel an offer of stock amounting to almost 18 percent of Banco do Brasil's capital due to institutional investors' worries the new government would reverse the bank's drive to greater profitability. The stock offer aimed to raise the bank's float to 25 percent of its share capital as part of a plan to list on the "New Market," a Brazilian stock index designed to attract new investors with more stringent laws of disclosure and improved shareholder rights. ($1 = 3.585 reais)