MercoPress. South Atlantic News Agency

Brazilian president Lula da Silva “guarantees” economic growth

Brazilian president Luiz Inacio Lula da Silva “ensured” Monday that the Brazilian economy will grow even more in 2006, in spite of general and presidential elections. However, market forecasts are not so enthusiastic.

"I'm not promising, I'm guaranteeing the Brazilian people that Brazil will develop much more in 2006, with a more vigorous and more solid expansion", said president Lula in his last radio program of the year.

"I believe 2006 will be exactly what I'm telling you, a year in which industry will grow more, employment will increase, incomes will increase and I'm sure everything is going to be better in 2006", he added.

But private analysts are not so convinced following the deceleration of the third quarter which has led them to down grade growth estimates for 2005 from 3% to 2.5%, and 3,5% for next year, according to the Central Bank monthly poll among the leading businesses of the country.

Finance Minister Antonio Palocci stated Friday that the Brazilian economy is poised to expand 5% in 2006.

Mr. Lula has insisted that although 2006 is an election year, "elections can't become an obstacle, should not become an obstacle, will not become an obstacle" for the government development plans.

"Obviously we'll have a political dispute which always generates much discussion but I think the role of the president is to ensure that politics don't dominate the daily management of government or the country's development".

President Lula has still to announce if he will be running for re-election. His popularity has suffered severely following revelations of a network of illegal payments orchestrated by his Workers Party to buy support in Congress for the government's legislative agenda.

President Lula insisted that Brazil is now a country with international credibility, "with its books in order" and with the necessary robustness "to cancel in advance its debts with the International Monetary Fund".

"We're making decisions with no interference from the IMF or any other multilateral organization", he highlighted.

The latest Central Bank poll also indicates that business leaders expect lower interests since the reference rate began a steady four months slide last September from 19.75% to the current 18% and hopes of a further cut in January to 17.5%, probably ending 2006 at 15%.

But economic agents also believe that foreign direct investment in Brazil will remain stabilized in 15 billion US dollars both in 2005 and 2006, contrary to earlier forecasts in excess of 16 billion US dollars.