MercoPress. South Atlantic News Agency

Orthodox Lula pushed reforms.

After a stern warning to the most radical Congressional members of his own party, Brazilian president Luiz Inacio Lula da Silva personally delivered in Congress two reform bills that are crucial for his administration and the long term financial stability of Brazil.

If the social security and fiscal reforms are finally approved, as it seems possible, following a political agreement with the country's powerful state governors and their representatives in the federal Congress, President Lula will have achieved goals that have been in the country's agenda for decades and politically elusive even when the country was under military rule.

Reforming the social security means that the privileged Brazilian civil service will have to submit to similar regulations that apply to the private sector, with caps for the highest pensions plus monthly 11% contributions to help finance the red numbers of the over stretched system.

The political agreement however faces resistance from several Senators and Deputies of Mr. Lula da Silva's ruling party who have been threatened with expulsion is they do not accompany the party's majority decision.

"Everybody has the right to talk about nonsense, but when a decision has been taken by the majority of the party, this must be respected and all must support it", stressed president Lula publicly addressing the dissidents.

The rebels had anticipated they will go to Court to impede the government from spending public funds in promoting the new bills.

In a more conciliatory tone President Lula emphasized that if "this government fails, it will take the left another fifty years to reach power; we can't, and I will not throw overboard this opportunity".

"The conversion of the left wing parties to the current economic policy and reforms is very hard, since they have always preached and defended the opposite", said Walder de Goes a Brazilian political analyst in Sao Paulo

In the 120 days since taking office President Lula da Silva contrary to many expectations has been extraordinarily orthodox in the management of Brazil's economy that has reflected positively in money markets and the exchange rate.

Brazil's country risk had dropped dramatically from 2,700 points to below 600, and keeps falling; the local currency has strengthened and now stands at 2,90 Reales to the US dollar, an 18% recovery from January when the greenback was priced at 3,50 Reales; almost a billion US dollars in Brazilian Treasury bonds floated this week in Wall Street were rapidly acquired by investors anticipating a fluid renewal of bonds maturing next December and marking the return of Brazil to international money markets with sovereign bonds.

Mr. Lula da Silva has also committed stricter budget goals than those agreed with the IMF, pushing primary surplus from 3,5% to 4,25% of GDP. "The ball is now in your court, and you now decide the game", said Mr. Lula da Silva to Congress on delivering the bills to the president of the lower House.

The reforms are expected to be approved by Congress in the second half of the year with savings above five billion US dollars annually.