MercoPress. South Atlantic News Agency

Rousseff insists oil royalties should be invested in education; divided Congress disagrees

The president called on Brazilians to press their lawmakers to back her initiative

Brazilian President Dilma Rousseff said she has sent to Congress another proposal to earmark all oil royalties collected by the state for public education after lawmakers shelved an earlier effort. Rousseff made the announcement in a televised Labour Day speech in which she said improving education was vital for Brazil's development in a highly competitive world.

Last year she proposed earmarking for education all revenue from future oil royalties, which are expected to rise when Brazil taps huge sub-salt fields off its Atlantic coast. But despite her personal interest legislators suspended discussion of the plan last week after it got caught up in a dispute between Brazil's states over how to share out the country's oil wealth.

A presidential press spokesman said he did not know whether the new plan to tie oil royalties to education was different from the first proposal.

Rousseff called on Brazilians to press their legislators to back her effort. In her speech, Rousseff said Brazil achieved record-low unemployment last year, while other countries were losing jobs.

She promised that Brazil's sluggish economy would return to sustainable growth after more than a year of near-zero economic expansion, and that her government would continue to cut taxes and reduce costs for local businesses and consumers.

Rousseff said her government will not relax its efforts to curb inflation, which in March rose to 6.59%, the highest 12-month rate in 14 years.

“This is a constant, unchanging and permanent battle” she emphasized.

In related news on Thursday is was revealed that Brazil's manufacturing output just barely expanded in April according to a survey

The HSBC Purchasing Managers' Index for the Brazilian manufacturing sector fell to a seasonally adjusted 50.8 in April, from 51.8 in March. Still, the index stood above the 50 mark that divides expansion from contraction, where it has remained since October.

Total new orders rose for the seventh straight month, though at the slowest rate since October, while new export orders fell slightly due to weak demand from key export markets.

The data suggest Brazilian industry is barely hanging onto a recovery following a three-year period of mediocre growth due to weak global demand and structural challenges such as low productivity, high taxes, infrastructure bottlenecks and a tight labour market.

A 2.7% drop in output last year contributed to a mediocre 0.9% growth rate for the economy as a whole, though analysts expect a slight improvement in the first quarter this year.

A weekly central bank poll of analysts published on Monday showed the economy is expected to grow 3.0% in 2013.