SAO PAULO, March 30 (UPI) -- Brazil's economic policy will not change despite widespread criticism from opponents and allies alike, the nation's finance minister said Tuesday.
Addressing the Senate Economic Affairs Committee, Antonio Palocci told lawmakers that the ruling Workers' Party administration, or PT, "decided to be responsible in the long term" when it came to designing Brazil's economic agenda.
Palocci told the committee that the during President Luiz Inacio Lula da Silva's first year in office, the PT administration focused on reducing spending and inflation to promote economic stability.
However Lula and Palocci have come under heavy fire for presiding over an economy that shrank 0.2 percent in 2003 and for not creating more jobs as promised.
Unemployment figures for February released last week showed that joblessness rose from 11.7 percent in January to 12 percent the following month. In Sao Paulo, Brazil's industrial and investment epicenter, unemployment reached a staggering 19.8 percent, meaning some 4 million of the greater metropolitan area's 20 million people are out of work.
Leading up to his October 2003 election and since then, Lula promised to create some 10 million new jobs and jump start Brazil's lagging economy. However, during his first 15 months in office, he has been unable to make good on that pledge.
The thinking behind his conservative economic approach appeared to be an effort to convince investors at home and on Wall Street that Lula would not default on billions of dollar in International Monetary Fund debt or steer Brazil to the far left, as many in the Bush administration have publicly worried he would do.
Now Brazilians -- particularly big business and lawmakers -- are asking Lula to loosen the reins and give the economy a chance to recover on its own. The president still seems reluctant to do so for fear of rising inflation. He lowered interest rates earlier this month by only a quarter of a point to 16.25 percent -- still among the highest in the world.
Palocci said that in order for Brazil to grow in 2004, the nation needs to make itself appear more attractive to investors.
"The issue we are analyzing regarding to the 2004 agenda is how to increase the potential GDP (gross domestic product) to produce sustainable growth over the coming years," said the minister.
Analysts view such rhetoric as an indication that little will change on the economic front even through many are clamoring for change and calling for Palocci's head to boot.
Earlier this month, both opposition leaders and PT officials began calling for the finance minister's dismissal as well as that of the Central Bank President Henrique Meirelles. Lula maintains that both men are still in his good graces and have his support for the long haul.
Meanwhile, Brazil's troubled financial situation is being compounded by a recent political scandal that is threatening to stall any efforts by Lula to right the economy. The never-ending criticism and fresh revelation have already stymied the administration and could further fracture the Congress along partisan lines.
Last month, a leading magazine reported that Waldomiro Diniz -- a former PT adviser -- received illegal gambling moneys connected to the bingo industry to fund certain PT candidates' campaigns during the 2002 election.
The president fired Diniz -- even though at the time of the infraction he was not officially a member of the PT -- hoping to put a quick end to the ordeal.
However, since then, opposition parties have been clamoring for a parliamentary commission of inquiry, or CPI, to investigate Lula and the PT. They are also calling for the resignation of Lula's chief of staff and key adviser, Jose Dirceu, who had close ties with Diniz.
Opponents gathered enough signatures in Congress to formalize an inquiry, but the PT power base managed to bat it down thanks its coalition partner, the moderate Democratic Movement Party, which refused to participate.
Constitutionally, the commission could convene without a majority from congressional parties' support.
That did not stop state legislatures from convening their own CPI, as Rio lawmakers did last month. Diniz is set to testify to the commission on April 6.
