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 Assuming a second term of office, Brazilian President Luiz Inácio da Silva told Congress: "One of the deepest commitments that I have with myself, is that of never forgetting from where I came." The president's personal history of poverty, migration from the northeast and a childhood lost to gruelling work is well-known among Brazilians and resonant of the struggles many of his compatriots face.
At the same time, it is a narrative that has helped cement Lula's personality cult. That cult was mobilised by campaign managers in the recent re-election battle both to create the idea that Lula has a visceral commitment to the needs of the poor, and to underscore his integrity in the wave of corruption scandals that rocked his government. The campaign strategy was successful, with Lula's comfortable victory clinched by support in the less industrialised north and northeast, as well as among lowest income groups nationwide. Of course, this backing was not just the result of spin - these groups had experienced real gains under Lula's first term of office - income inequality in Brazil slightly reduced and 8 million were lifted out of poverty through a combination of federal government income supplements and a raising of the minimum wage. "It is the first time in the history of Brazil," says Maurício Andrade, coordinator at the anti-poverty NGO Ação da Cidadania "that we have a set of income distribution programmes on a major scale." However, Andrade's position is not reflected all across civil society. Significant elements are disillusioned with the slow pace of change and have long felt betrayed by Lula. The landless rural workers' movement (MST) and other organisations, including the trade and student unions CUT and UNE, are pushing the government to reform the economic model itself. To this end, they are organising land and property occupations, road blocks, demonstrations, and personal meetings with the president. But indications so far are that economic growth will remain the central goal of a second term, just as it was in the first, and that this will be carried out within a free market framework: "Continuation of free-market policies (...) with more social content," is how Albert Coutinho - senior economist at economic consultancy Moody's Economy, in the United States - refers to the course that will be taken. In its first term, the government relied upon increased export revenues based upon a strong real, together with shaving off funds from elsewhere in the budget, to support social spending. While Brazil's diversified export profile would cushion against potential downturns in the global economy during the next four years, growth is still predicted to be moderate and so may not generate new revenues to invest in the social sector. At the same time, the federal budget is squeezed in many directions. Some 90% of funds are earmarked by the constitution and other legislation (mainly on pensions and public sector salaries) and the large primary budget surplus of 4.25% of GDP also imposes restrictions on government spending. This leaves a very small margin for public investment for which a variety of essential sectors, from energy, to transport, as well as health, education and housing all clamour. Although markets are pressurising government for constitutional reform to liberalise spending allocations, actually making this happen could be a drawn-out and unpopular process. Meanwhile, the pressure from these sources for broad continuity with the economic priorities of the first term is strong: "Any further unwinding of the commitment to sound macropolicies in the coming years would result in a deterioration in sovereign creditworthiness. Fitch will closely monitor the Lula government's choices to fill key economic policy posts, as well as official statements about the continuity of macro policies," says a post-election report released by credit agency Fitch. The report concludes that a number of measures need to be taken to enhance Brazil's (gradually improving) creditworthiness: "In addition to economic reform, sovereign creditworthiness in Brazil would be served by a political reform that strengthens political parties and reduces the current fragmentation of power, which would enhance the prospects for substantive public policy action." The credit agencies at first glance would appear to have an unlikely ally, in the form of the social movements, in their quest for political reform. The Brazilian Association of NGOs (ABONG) is developing a bill to present to Congress which deals with precisely this issue. According to Brazilian social movements specialist, Professor Kathryn Hochstetler, the strategic reason for this is the dissatisfaction of these movements with the limited gains obtained by traditional mobilisations. But in fact the divergences between the discussion on political reform happening in business and media circles (which focuses on electoral rules) and that in civil society organisations (which calls for a deeper democratisation of the state and economic power itself) are enormous. The latter project includes referenda for all agreements with international financial institutions (IFIs), an extension of popular participation in the budgetary process to state and federal levels and the obligation of new administrations to continue successful social programmes begun under predecessors. How this will be received by the government is uncertain. Elements of Lula's Workers' Party (PT) are keen to maintain links with social movements, but Lula's faction has moved away from participatory politics and firmly showed its commitment to the very socio-economic measures this bill seeks to reform. However, there is no certainty that current supply side policies will raise the still sluggish levels of economic growth. In a bid to reach the central goal of his second term, Lula's economic planners may turn to increased public spending to generate consumption-led growth. In the meantime all over Brazil, children will continue to be told the tale of the poor boy who became King. Luke McLeod-Roberts is a freelance journalist based in Rio de Janeiro. He can be reached at lukemcleod@yahoo.com
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- His social investments are mainly the 8 billion Reais for 45 millions citizens, or the equivalent of 0,45 reais per day, representing less than 2 % of the federal budget for 23 % of the poorest citizens. Not so social.....in my view. !
As for the economic growth, Lula totally failed to deliver during his first mandate by having the lowest growth rate of all comparative countries...on this planet. Thus if he intends to continue that same way...guess what will be the growth rate of the next four years ! Lagging everyone....again....probably !
Despite your actual "low" rates, they are still the highest in the world......after inflation ! Thus they are still very high
these apparent low rates.
Far worse is the lending rate of the banking industry. Unheard of.....on this planet too ! Well above 130 % for overdrafts,
around 55 % for individals, 30 % for small and medium companies, and below 10 % for large companies....as they are financed and subsizided by the government through the BNDE.
And all this while your inflation is below 4 %. Truly a license to steal accepted.....by a leftist ! Curious ! There is no other country on this planet where bankers could do the same....without the risk of being jailed !
Therefore the Brazilian common saying of : buy one...but pay 2 or 3....is quite accurate.
Or the other common saying : if you buy 1 good for you....you must offer 1 or 2...to your banker.
A real official and accepted license to steal. A verbal and secret deal...with Hell (Lula) : steal as much as you wish from the population.....as long as you vote for me and dont bother me !
Sadly that same type of backstage deal has been in force with ALL the corrupted politicians.
Therefore Lula and his gang will still say how much the consumers loans increase, but hide the reality that it is from a very low
starting base and with interests rates unheard elsewhere !