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Brazil's Lula: Pension-Reform Plans Should Stay Unchanged
By Terry Wade, Dow Jones
July 14, 2003
PAULO - Despite signs he might accede to pressure to water
down proposed pension reforms, President Luiz Inacio Lula da Silva says
his government's proposal to reform the nation's retirement funds should
best thing for Brazil" is for the existing proposals to be adopted in
their entirety, he told the BBC over the weekend while in London on a
federal government workers went on strike last week to protest the
reforms, which would do away with existing benefits like retiring at full
salary and receiving pension benefits tax-free.
administration briefly said it would alter the reforms to placate the
striking workers, but that touched off outcries from governors who had
backed the reforms and the government then flip-flopped. This week Lula's
administration will face key debates on the issue in Congress.
deficits in Brazil's social security system and pension funds account for
about 5% of gross domestic product. Wall Street is keen to see the
deficit- narrowing reforms passed, as they would help cut Brazil's risk
Besides touting his reforms plans, Lula told the BBC interest rates will fall "systematically" now that inflation is under control. Brazil's benchmark interest rate of 26% is among the highest in the world, but the central bank is expected to loosen monetary policy later this month amid sluggish economic growth and improved price stability.