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Last Updated: Wednesday, 28 May, 2003, 11:10 GMT 12:10 UK
Lula forms pact to tackle debt

By Tom Gibb
BBC correspondent in Sao Paulo

Brazilian President Luis Inacio Lula da Silva
People thought Lula would drag Brazil to the left
Brazil's President Luis Inacio Lula da Silva has made a pact with one of the largest opposition parties to allow the government to pass key economic reforms.

Economists say the key to Lula's success and to reducing the long-term burden of Brazil's debt lays in restructuring the economy.

A year ago, some predicted that Lula would take Brazil radically to the left.

But the pact just announced between the government and the largest centre-of-the-road Brazilian party show instead a strong continuity.

The Brazilian Democratic Movement Party was a mainstay throughout the eight-year mandate of Brazil's last president.

Now, it is offering Lula crucial support in Congress.

U-turn

The party is the third largest in the lower house and the largest in the Senate. In return, Lula is expected to offer one or two ministries.

The pact is no surprise. Lula has done a U-turn from past years and is now staking his success on reforms to cut state pensions and simplify the tax system.

Ironically, identical measures put forward by the last government were defeated by Lula's Workers' Party.

The reforms are seen as crucial to prevent Brazil from going bankrupt.

But some on the left of Lula's party accuse him of betraying the Workers' Party's traditional platform.


SEE ALSO:
Brazil slumps on debt action
26 May 03  |  Business
Brazil split over sky-high rates
22 May 03  |  Business
Lula pushes Brazil reforms
01 May 03  |  Business
US praise for Brazil's reforms
24 Apr 03  |  Business
Brazil raises minimum wage
01 Apr 03  |  Business
Brazil secures World Bank loan
29 Mar 03  |  Business


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