Brasília, 3/25/2004 (Agência Brasil - ABr) - The government's biggest ally, the PMDB, has released an official position note saying that its continued support of the administration depends on changes in government economic policy. The PMDB note states that it is "unacceptable" to consider inflation control and economic growth incompatible. "Our support requires policies that promote growth, distribute income and create jobs," says the note.

The PMDB calls on the government to be "bold," and break free of the obstacles that "strangle growth," and makes a series of suggestions that would create what it calls a domestic economic virtuous cycle. Among the suggestions are: lower interest rates, a smaller tax burden for small businesses, adjusting tax rate tables (brackets) and boosting low-cost housing starts.

The publication of the note caused some bad feelings in Congress. Called on to do some explaining, the PMDB president, Michel Temer (SP), said that the party's support has always depended on the suggestions in the note, but that many of the proposals coincided with the administration's position.

"The PMDB is in favor of development. If there isn't any development, it becomes hard for us to give our support. The PMDB will continue to support the administration if there are changes in economic policy. I believe the changes we want are changes the government also wants," declared Temer.

Temer did not set a deadline, but he added, "The ideal would be for changes to start this year."

The PMDB vice leader in the Senate, Romero Juca (RO), explained that the party note was not a threat. "The PMDB is a strong party. It does not have to make threats," he declared.

As for the PT, the government's leader in the Senate, Aloizio Mercadante (PT/SP), said he did not see the note as a threat to the alliance, calling many of the suggestions "totally compatible" with government objectives. "That is important because the PMDB has shown consistent support. The PMDB has been consistent in debates, votes and at all times," said Mercadante.

The PMDB is the biggest party in the Senate, with 22 senators. It is the second biggest in the Chamber of Deputies, with 78 deputies. The party has two cabinet members: minister of Communications, Eunicio Oliveira (CE), and minister of Social Security, Amir Lando (RO). (translator: Allen Bennett)