Ana Paula Marra and Iolando Lourenço
Reporters - Agência Brasil

Brasília – The government and the opposition in Congress have reached an agreement on one sticking point in the 2006 budget negotiations, which means that only four problems remain.

According to the man who is steering the budget through Congesss (relator do Orçamento), deputy Carlito Merss (PT-SC), an agreement has been reached on the Kandir Law (lei Kandir) which compensates states for tax exemptions (the ICMS tax) given to exporters. After intense negotiations involving states, the executive branch and the legislature, it was decided states will receive an additional R$ 5,2 billion which will come out of the federal government's appropriations.

The opposition (PFL and PSDB) still have four other demands they want met before voting on the budget. They are: more funding for the Coari-Manuas gas pipeline; more money for an irrigation project in the state of Bahia; more money for the state of Sergipe; and more funding for the 2007 Pan American games that will take place in the city of Rio de Janeiro.

It should be pointed out that the states mentioned above, Bahia and Sergipe, and the city of Rio de Janeiro, are governed by the PFL.

"If those issues can be resolved, we will vote the budget," declared senator Arthur Virgilio, (PSDB-AM), an opposition leader in the Senate.

Translation: Allen Bennett