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Last Updated: Tuesday, 23 January 2007, 10:18 GMT
Lula pins hopes on economic plan
By Steve Kingstone
BBC News, Sao Paulo

Brazil's President Luiz Inacio Lula da Silva a
Lula is offering tax breaks for the private sector
Brazil's President, Luiz Inacio Lula da Silva, has announced an investment programme totalling $240bn (121bn) for his second four-year term of office.

Lula, who was re-elected last October, wants to involve the private sector in plans to upgrade roads and railways and develop the country's energy provision.

Launching the plan, he said it was time to "broaden Brazil's hopes".

But critics say it fails to address the deeper structural problems of the Brazilian economy.

'Disciplined'

Lula won re-election boasting that he had reduced poverty and inequality in Brazil.

But for the last two years the overall performance of the economy has been disappointing - with growth averaging less than 3%.

The ambitious Acceleration Programme for the Country's Growth announced on Monday aims to bring the rate of growth up to 5% by next year.

Thirteen per cent of the $240bn will come from central government - the rest from state-controlled companies and the private sector, which is being offered tax breaks to participate.

Lula said the package would be carefully phased in and that public spending would remain disciplined.

Test

But some commentators are asking how the president can achieve all of this at the same time.

His programme does not offer the major overhaul of tax structures that many economists are calling for, or detailed proposals to reform a heavily-indebted pensions system.

The investment programme must be approved by Congress and backed by powerful state governors.

It all adds up to a test of Lula's political skills and of Brazil's ability to live up to its ambitions.

This developing world giant is often compared to China, India and Russia, but for now, its rate of growth lags far behind theirs.




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