Keeping the Faith

Dec 1, 2002

The international financial markets have warmed to Brazilian President-elect Lula's statement-like pronouncements. But he must impose unpopular austerity measures to keep investors satisfied.

It seems almost too good to be true. Brazil's President-elect Luiz Inácio Lula da Silva seems to have transformed himself from left-wing agitator to statesman before he has even taken office. Elected in a landslide in October, the former lathe operator, union organizer and founder of the Workers Party (PT) is sounding more like the voice of reason with every day that passes. He has vowed to honor the government's crushing debt of $230 billion when he takes office on January 1. He has rejected demands for a big rise in the minimum wage, which would trigger increased pension payments and civil service salaries. Lula and his transition team say they will deliver a primary budget surplus - before interest payments - to stabilize the debt and comply with a $30 billion loan program agreed with the International Monetary Fund in September. Financial markets heaved a collective sigh...

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