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Brazzil - Foreign Relations - July 2004

Brazil's Lula Pays 3rd Visit to Africa

Brazilian President Luiz Inácio Lula da Silva is back in Africa.
The purpose of Lula's third trip to the continent in less than two
years is to establish closer diplomatic relations with the African
continent. Brazil should soon have diplomatic representation
in Ethiopia, which headquarters the African Union.

Juliana Cézar


Picture President Luiz Inácio Lula da Silva arrived in Africa on July 26 for the purpose of establishing even closer diplomatic relations with the continent. In addition to transferring the temporary presidency of the Community of Portuguese-Speaking Countries (CPLP) to San Tome and Principe, the Brazilian President wants to foster trade relations with this country, as well as Gabon and Cape Verde, two other stops on his third trip to the continent.

The Brazilian Minister of Foreign Relations, Celso Amorim, who is accompanying the President, observed that the three countries can become important "windows of opportunity" for increasing Brazil's trade relations with Africa. And he underscored President Lula's decision to open new embassies on the continent.

Amorim added that Brazil will soon have diplomatic representation in Ethiopia, where the headquarters of the African Union is located. "One cannot desire a policy of closer relations with Africa without diplomatic representation in the country that hosts the African Union," the Minister pointed out.

Gabon, for example, is a "very well placed" country for Brazil to establish or improve relations with other African nations, in Amorim's view. The Minister also recalled the geographic location of Cape Verde, an African country which, in his opinion, can become "a center for the diffusion of Brazilian actions."

Besides the creation of new diplomatic posts, the Brazilian government will also open a branch of the Bank of Brazil, in Luanda, capital of Angola.

During his African trip, President Lula will inaugurate two telecenters donated by Brazil, the first in San Tome and Principe, and the second, in Cape Verde. Altogether, two servers and nine 18 thin clients (computers without hard drives) were sent to Africa.

In San Tome. the Brazilian President will also announce the authorization of US$ 650 thousand for bilateral cooperation programs developed between the two countries. Various programs are also underway in the health and agriculture areas, although the main ones are in the field of education, where they serve a total of two thousand people.

During his visit to the country, President Lula will donate approximately 60 kilos of medications that make up the Aids treatment cocktail. San Tome is one of the few developing countries in Africa with a low incidence of this disease. The medicine donated by the Brazilian government will be sufficient to treat all the Aids victims in the country, around 100 individuals.

US$ 90 Billion

The Minister of Development, Industry, and Foreign Trade, Luiz Fernando Furlan, told a group of entrepreneurs attending the XIV Brazilian Congress of the Confederation of Commercial and Entrepreneurial Associations of Brazil, in Curitiba, in the southern part of the country, that Brazil's exports should increase 50 percent over the next two years. According to Furlan, this year alone the total should rise from last year's US$ 60 billion to around US$ 90 billion.

In the Minister's view, the world market still offers considerable space. He told his business audience that many people are unaware of Brazil's industrial potential. He pointed out, for example, that the country is the world's largest producer of electronic games for cell phones. "The figures leave us optimistic that this year's economic growth will surpass the 4 percent forecast."

The Minister justified his optimism by recalling that, in the sphere of loans, a critical factor for small firms, data from the National Economic and Social Development Bank (BNDES) for the first half of this year indicate a 46 percent growth in the supply of credit for small and medium-sized companies, in comparison with last year, for a total of US$ 1.8 billion (R$ 5.6 billion). According to him, various forms of credit are being launched for firms to modernize themselves.

Furlan referred to the creation of the Machinery Modernization Program (Modermaq), which will finance 90 percent of a company's equipment expenses, with a five-year repayment period and a fixed annual interest rate of 13.95 percent, a little more than 1 percent monthly. According to the Minister, the government has US$ 813 thousand (R$ 2.5 million) available for this program at the outset.

Risk Premium to Fall

Minister of Development, Industry and Foreign Trade, Luiz Fernando Furlan, says he is certain that Brazil's risk premium will fall from the present 600 to around 400.

The minister points out that a series of factors indicate a drop. The sum of exports and imports is near US$ 30 billion and the country has a cumulative 12-month cash flow surplus of around US$ 30 billion, as well.

Both numbers show firm administrative control and robust commercial strength. Furlan says that the International Monetary Fund mission will take note of those factors.

He explained that a drop in the risk premium is important as it will create room for further reductions in the country's basic interest rate. He added that the effects of the economic upturn during the first six months of the year will be felt, giving employment and income a boost.

Juliana Cézar works for Agência Brasil (AB), the official press agency of the Brazilian government. Comments are welcome at lia@radiobras.gov.br.
Translated from the Portuguese by David Silberstein.

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