MercoPress. South Atlantic News Agency

Lula under pressure from his party

Brazilian president Luiz Inacio Lula da Silva is under strong pressure from his party high ranks and the business community to impose changes in his administration's orthodox economic approach.

Rocked by the recent scandal involving a first line aide of Mr. Lula da Silva's main advisor Jose Dirceu, (who was filmed taking money from an illegal gambling criminal), and the contraction of the Brazilian economy in 2003 (-0,2%) the Workers Party made a release to the rank and file asking for the defence of the "ethical and political heritage" of the organization.

"We're going to work hard to ensure the government implements the necessary measures so that 2004 becomes the beginning of a new cycle of economic and social development by introducing changes in economic policies, necessary to consolidate our social, economic and administrative programs", reads the release.

There are no further details of measures but one of the them most probably are the high interest rates, openly condemned by the business community, but unyieldingly supported by the Finance Ministry and Brazilian Central Bank.

The current basic 16,5% helped rein inflation and the 2004, attainable, target in 5,5% when only 18 months ago Brazil was heading for a 40% inflation. However the high interest rates stifled growth, contracted domestic investment and demanded more resources to pay for the indexed country's debt equivalent to 60% of GDP.

President Lula in his 2002 campaign promised to create 10 million jobs but in his first year unemployment actually increased.

Workers Party radical dissidents were expelled for criticizing the orthodox government policy last year, but now it's the organization's president Jose Genoino who is complaining and demanding changes.

Similarly the Brazilian Infrastructure and Basic Industries Association openly expressed its disenchantment with government policy and warned Brazil was becoming a country without profits or rules which makes it difficult to attract investments for infrastructure and basic industries.

"The Brazilian consumer market has lost its attraction with the strong salaries contraction and the rocketing of the informal economy", adds the organization emphasizing that the government has limited its activity to "patching" the problems and challenges. "Sound projects in energy, water and sewage, transport and logistics are stagnant because of the regulatory instability", reads the text of the declaration most of which was published in the main Sunday newspapers of Sao Paulo