Brazil candidates hold TV debate

Brazil's presidential hopefuls stage their first televised debate in a few hours time.

Although the elections are two months away, the campaigning is already causing havoc with South America's largest economy.

This debate is being promoted by some commentators in Brazil as the last chance for the government candidate, Jose Serra.

He is favoured by financial markets to get back into the race, but currently is trailing badly in third place.

Strong opponents

These elections will end eight years in the presidency for Fernando Henrique Cardoso.

His policies have stuck closely to International Monetary Fund recommendations and have been welcomed by international investors.

But he is not allowed to stand for a third time, and his chosen successor, the former Health Minister, Jose Serra, is in trouble.

For months he had been trailing in second place behind Luiz Inacio Lula da Silva, the leader of the left-wing Workers Party.

He is a veteran campaigner known in Brazil simply as "Lula".

Then suddenly in the last two weeks he has been pushed into a distant third by Ciro Gomes, a former governor of a state in north eastern Brazil.

While much of his discourse could be regarded as left of centre, Ciro Gomes has the backing of several powerful Conservative politicians.

Young, charismatic and married to a soap opera star who won a battle against cancer, his rise in popularity owes much to a successful television campaign.

Financial troubles

The opinion polls have been putting investors in a panic.

Election uncertainty has combined with serious worries as to whether Brazil will in the long term be able to keep paying its $264 billion debt.

The government is negotiating a deal with the IMF.

But that may require assurance from all the front-running candidates that they will follow fiscally responsible policies.

The deal will almost certainly be at the top of the agenda of the US Treasury Secretary Paul O'Neil who is starting a tour of South America in Brazil.