Brasília - "There is no possibility of the government reducing its 2004 primary surplus target from 4.25% of GDP, as the author (redator) of the Multi-Year Plan (PPA), senator Saturnino Braga (PT-RJ), is proposing. The redator and the goverment do not agree on this point," declared Presidential Chief of Staff, Jose Dirceu, at a news conference following a meeting of the Infrastructure Chamber.

Dirceu explained that Braga's idea had legal problems because any change in the primary surplus target would have to be made in the Budgetary Guidelines Law (LDO), not the PPA. He pointed out that this year's primary surplus of 4.5% of GDP had made it possible for the government to reduce the country's key interest rate from 26% to 16.5%, and keep inflation on a tight rein.

The minister also denied charges by Braga that the PPA funding was not realistic (super dimensionados). Dirceu explained that government figures in the PPA included private sector sources of funding and revenue.

As for press reports of disagreements on monetary policy pitting him and the minister of Finance, Antonio Palocci, against the president of the Central Bank, Dirceu declared: "The government has absolute confidence in the Central Bank president, Henrique Meirelles." (AB)