Brasília, 3/31/2004 (Agência Brasil) - During a public hearing at the Senate Commission on Economic Affairs, minister of Finance, Antonio Palocci, declared that the main challenge facing the Brazilian economy today is to bring together the necessary conditions which will make sustainable growth and credibility that result in social justice possible now and in the future.

Palocci said efforts this year were being concentrated on growth with social inclusion. The necessary groundwork has been prepared in the form of macroeconomic stability, along with external and fiscal sustainability.

The minister said that the country has successfully reduced the basic interest rate, but that more in that area had to be done, with caution and firmness.

Palocci declared that jobs are fundamental for balanced economic growth. He pointed out that the mining and farming sectors have been leading the way during the Lula government. On the downside, the minister cited the building industry as the area with the worst job performance.

Increased productivity is another factor of fundamental importance if the country is to achieve renewed private sector investments and economic growth, said the minister.

Palocci said the pillars of development were fiscal and monetary accountability (reaching fiscal targets and keeping inflation under control); honoring contracts; the placement of an efficient social safety net (Social Security system reform and social assistance programs); and, a dose of entrepreneurship (tax reform and fewer restrictions on credit, along with stimulus packages for commerce).

According to the minister, the country would be in the midst of an unprecedented economic crisis if the government had not implemented the measures it did, such as inflation control.

Palocci declared that Brazil did not want another IMF agreement because another one is considered unnecessary. "This year we did not need a big agreement [the loan agreement is for US$14.6 billion]. It is a preventive agreeement which will allow us to terminate many years of IMF agreements," he said.

In conclusion Palocci said the economy and the budget were in much better shape this year. He added he was in favor of maintaining the 4.25% of GDP primary surplus target for the time being. (translator: Allen Bennett)