MercoPress. South Atlantic News Agency

Lula ponders about IMF support.

The administration of Brazilian president Luiz Inacio Lula da Silva is assessing whether it can free itself from International Monetary Fund support financing, or will it have to renew the current accord that expires next November.

The current accord involving 30,4 billion US dollars, (and an extension from 1998), was agreed in September 2002 and helped Brazil face the election scares that depreciated the country's currency 35%, triggered inflation and slowed economic growth.

However the decision can be crucial for the seven months old administration since Brazilian public opinion is not fond of IMF "meddling interference" and President Lula da Silva's Workers Party made much of its political foundation criticizing the IMF.

Since taking office last January President Lula da Silva has managed to recover investors trust and has given ample evidence of his determination to respect orthodox macroeconomic policies, "but next year's (debt) payments calendar is quiet impressive", according to financial market analysts in Sao Paulo.

Nevertheless Brazilian officials have indicated they will not be deciding until the IMF next visit to the country, a month before the current agreement expires.

"We won't have problems with the current IMF review and since budget primary surplus numbers (4,25% of GDP) are very encouraging we will have immediate access to 4,265 billion US dollars from the accord: We'll be closer to a decision when the following review next September", said Planning Minister Guido Mantega.

Market analysts point out that the country's international reserves stand at 15 billion US dollars, almost similar to next year's debt payments, and foreign investment has significantly contracted, which makes Brazil vulnerable to foreign turbulences.

Jorge Marquez-Ruarte head of the IMF technical mission said that "with or without accord the IMF will continue to strongly support Brazil".

But deciding about the direct IMF link is the lesser of Mr. Lula da Silva's problems: his attempts to reform the current old age pension system are confronting strong resistance from the bureaucracy and the Judiciary branch has anticipated a five days long strike next week; the Brazilian economy remains stagnant with local consumption and employment depressed, actually in the last seven months Brazil's unemployed have swollen by 460,000; the landless peasants movement, a traditional ally of the Workers Party, have resumed occupation of farm land, and discontent among his legislators has become national headlines.

Actually to the last meeting with governors and legislators to press the congressional agenda President Lula da Silva had to use the back door to avoid protestors.

According to press reports a veteran Brazilian politician offered Mr. Lula da Silva some advice: "avoid squabbles with skirted people, --magistrates, priests and ladies--, you'll never win".