Volume 4, No. 7, July 2003

 

Lula Cringes before IMF

 

The much promoted pioneer of the social-democratic alternative of the World Social Forum, has, as expected, begun to toe the IMF line — that too barely a month after coming to power. For all the pro-poor rhetoric Lula da Silva, now President of Brazil, has launched vicious attacks on social spending for the poor. The announcements came barely a fortnight after the third international jamboree of the Word Social Forum, inaugurated by him, with much fanfare, at Porto Alegere.

As reported in The Economist (Feb.15, 2003), the Finance Minister of the Workers’ Party (PT) announced the plans of the new government, on how they plan to contain the fiscal deficit as per the instructions of the IMF. This plan was presented on the eve of the IMF-review of the $30 billion IMF loan to Brazil. {Brazil has a bankrupt economy, with the public debt amounting to $250 billion (60% of GDP) and a foreign debt of $165 billion. As part of the bail out package, the US passed a $30 billion IMF loan to Brazil in Aug.2002 — on the eve of the elections that brought the PT to power — which was over and above the previous $15 billion loan already given}

The Plan: a massive hike in the prices of petrol and diesel to raise revenues; a cut in the increase in the wages of government employees, resulting in an actual fall in their real wages; a massive cut in social welfare spending by as much as $3.9 billion over the budgeted figure; the ministry of cities to lose 85% of its budget; and, worst of all, a drop in expenditure by as much as 90% on drought relief. Even measured against the previous years spending by the earlier right-wing government, this so-called left-wing President, has actually cut real spending on social sectors like health and education — overall social spending is to fall from 2.4% of GDP in 2002 to 2.2% in the current year.

On the eve of May Day, Lula came out with another major ‘gift’: he proposed a drastic cut in pensions of retired employees of the public sector. The proposals are now before the parliament.

So, Lula has, now achieved what the earlier right-wing government was unable to push through. Under a barrage of hypocritical rhetoric, and ‘left’ posturing, he is pushing in some of the most rabidly anti-people measures that could make him a favourite of the IMF. The capitulation is so complete that has been a result in his own party, with thousands coming out on the streets in protest.

Those of the World Social Forum and their offshoots like the Asia Social Forum, Please Note!!!

 

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