Brasília, 2/4/2004 (Agência Brasil - ABr) - There are fiscal restrictions which make it impossible for Brazil to grow at 5% to 6% per year at this time, says former minister of Finance, Mailson da Nóbrega. However, by keeping the economy open and maintaining currency stability, it will be possible to grow at 3% to 4%, he said, adding that in a globalized economy it was no longer possible to decree growth. The challenge the government faces is in microeconomic policy where igt will be essential to invest in infrastructure, he explained. Mailson made his remarks at a National Industrial Confederation (CNI) roundtable discussion of the economic situation in Brazil and the country's new industrial policy legislation.

The fact is, said Mailson, the Lula administration is not just a continuation of Cardoso economic policy, but rather an example of how you have to respect certain "universal values" in a globalized economy. According to Mailson, fiscal control, inflation targets and floating exchange rates are now used universally and that makes it harder for governments to have a free hand in setting interest rates or exchange rates.

Mailson praised the government's new bankruptcy law, but criticized the electricity sector legislation, calling it a step backward to state control compounded by increasing the risk of blackouts in the future. As for the tax reform, he said it had faults and one of them was the impossibility of unifying the ICMS tax next year.

As for inflation, Mailson said the Brazilian government now has institutional mechanisms it can use. He added that the public will no longer tolerate inflation and politicians who do not respect that fact will be punished at the ballot box.

The CNI president, Armando Monteiro, declared that he did not see any danger of an inflation spike at the moment, saying that any sharp jump in prices would result in an immediate drop in sales because Brazilian consumer purchasing power is so low. (AB)