It looks like the question will be one of the central issues in this year’s presidential election as it shapes up more and more like a battle pitting the PT (Lula’s Workers Party) against the PSDB (FHC’s Party of the Brazilian Social Democracy).
In an interview in Porto Alegre for the newspaper, Jornal do Comércio, Lula declared that it was incorrect to say that the success of his administration was due to just continuing the policies of Fernando Henrique.
According to the president, those policies would have been insufficient for his administration to have achieved the levels of accomplishment it has. Nor would the country, following only the FHC economic financial standards, have been able to come out of the international financial crisis in such good shape, said he.
“As a matter of fact, you can see that following the policies of the three pillars of FHC economic policy (floating exchange rate, inflation targets and primary surplus) Brazil did go broke in a crisis [1999] and had to get help from the International Monetary Fund,” Lula pointed out.
Lula explained that improvements in the economic policies he inherited from the previous administration were fundamental to his government’s good performance. He said, for example, that the maintenance of the floating exchange rate was combined with the accumulation of international reserves in such a way that it reduced the country’s vulnerability to external turbulence, “enabling us to respond quickly to the financial crisis.”
Lula said another improvement was in setting credible and adequate inflation targets coupled with the Accelerated Growth Program (PAC), with the result that interest rates have come down as the economy expanded.
Lula pointed that as for fiscal policy, starting in 2003 his administration decided to link primary surpluses with programs that transferred income to poor families, creating a mass consumer market that began to receive government spending.
“These are people who never got a cent of government money. Today these people, a third of the population, are taken into consideration. In the past, governments only operated to benefit a different third of the people, the ones in the upper levels. They did not care about the rest.”
According to the president, income redistribution in the direction of the poor is more than a question of social justice and basic rights. It creates a consumer market, boosts production and stimulates commerce.