Jennifer Jensen reports

Mr Cardoso took the presidential oath at a ceremony in the lower house of Congress in the capital, Brasilia. In his inaugural address, the President acknowledged that his first term had had both successes and failures and pledged to do everything in his power to reduce Brazil's notorious social inequalities.

President Cardoso (in Portuguese): "The unemployment situation worries me"

Mr Cardoso predicted that unemployment would rise but said his government would focus on "those projects which will open up new prospects of job and wealth creation, especially for the young,"

Facing an economic crisis in mid-1998, the government agreed to introduce strict financial measures in return for a multi-billion dollar loan from the International Monetary Fund.

Fragile alliance

Stephen Cviic in Sao Paolo: No sign yet of further reductions in social inequality

But Mr Cardoso, whose government is composed of a fragile political alliance, still has to persuade Congress to approve the economic plan; it includes social security, tax and political reforms.

The BBC Sao Paulo Correspondent, Steven Cviic, says the circumstances of the ceremony were very different to the same occasion exactly four years ago. In 1995 Brazil was a country in a state of euphoria - Mr Cardoso had swept to power as a result of his success in the job of Finance Minister when he brought down the country's notoriously high inflation.