MercoPress. South Atlantic News Agency

Brazilian markets keep trusting Lula da Silva

Brazilian markets on Monday reacted positively to Finance Minister Antonio Palocci strong denial of any involvement in corruption related activities in the mid nineties when he was an elected municipal official.

During an unusual Sunday press presentation Mr. Palocci said he had the full support of President Luiz Inacio Lula da Silva and highlighted that the current financial policies will continue undeterred.

The vote of confidence in Mr. Palocci was expressed in a 2,32 percentage recovery of the Sao Paulo Ibovespa Stock Exchange, the country's most important, with most blue chips over performing, and a 2,65% appreciation of the Real against the US dollar.

Both leading indicators plunged last Friday when a former aide of Mr. Palocci while he was mayor of Riberao Preto, Mr. Rogerio Buratti claimed that a garbage disposal company made (illegal) monthly payments of approximately 20,000 US dollars.

According to Mr. Buratti who is a solicitor and is currently in jail for money laundering and fraud, the money was destined to an unofficial Workers Party activities financing purse.

"I categorically and vehemently deny these claims. I did not receive or authorize collecting funds for the Workers Party board or for any other Workers Party activities during that period or any other period", stated Mr. Palocci.

When asked if corruption practices could have happened without him knowing, Mr. Palocci said he "was not playing with words", adding that if something of what has been claimed effectively happened, "I would have known about it from any of those who were involved".

Mr. Palocci then revealed that before the press conference he had talked with President Lula da Silva to offer his resignation but "the president asked me to tell you his decision: he does not wish I abandon the Finance Ministry. He will not support my exit not even momentarily"

The minister emphatically confirmed the current economic policy saying that there will be no left wing deviation to attract popular support for next year's elections, or an intensification of orthodoxy to calm markets.

"The administration has an only economic policy. It's not going to change. This policy is ratified every day by President Lula da Silva", stressed Mr. Palocci.

Leading opposition Senator Arthur Virgilio praised Mr. Paolocci's statement describing it as a "stress relief" for financial markets. However he added that so far it's Palocci's word against Buratti's, until no evidence emerges.

When asked why his former aide and close advisor had made the accusations, Mr. Palocci said he ignored his thinking but when Mr. Buratti did so, "he was hand scuffed, in a presidium costume and under great pressure".

This week President Lula da Silva is again expected to address the country on national television insisting on his original defense line that "no one is guilty until evidence proves the contrary".

But unfortunately for President Lula da Silva, many claims such as vote buying, skimming money from government owned companies and overseas funds in fiscal paradises such as Bahamas, to finance campaigning, and for years, have proved true either with documents or confessions.

A recent public opinion poll circulating in the Brazilian Congress for the first time showed that three opposition figures could in an October 2006 run off, defeat president Lula da Silva's re-election hopes.

They are Sao Paulo City mayor Jose Serra, Sao Paulo governor Geraldo Alckmin and former president Fernando Henrique Cardoso.