Brazil weathers financial storm by taking the opposite path to austerity

Even in the midst of a global crisis, which also has repercussions in Brazil, it has been possible for the country to address questions of poverty, Brazilian Lutheran theologian Walter Altmann told participants on Thursday.

Altmann, who is also moderator of the central committee of the World Council of Churches, was explaining how Brazil has tried to weather the storm of the financial crisis while also continuing programmes of poverty reduction and economic development.

Fifteen years ago, Brazil defaulted and had to go to the International Monetary Fund for a bailout. Today it has more than 300 billion US dollars in its reserves and is lending to the IMF. At the same time more than 40 million people have been lifted out of
poverty over the past 10 years and another 15 million out of extreme poverty, even if much still remains to be done.

Ten years ago there were 4 Brazilian reais to the US dollars. Now there are two, and at one point the real was at 1.5 to the dollar.

When Lula was elected president 10 years ago on his fourth attempt, many commentators predicted chaos and economic collapse, when the new government launched social programmes at the heart of government policy - such as guaranteeing a minimum income for every family. But the country grew economically, and Lula built up the nation's financial reserves, often in the face of opposition from the left.

But when the crisis hit, Lula said, "just like Jospeh, now is the time we are going to spend the money and put it in basic needs", through a housing programme that constructed dwellings and provided employment.

"Unemployment has never been as low as it is today," said Altmann, noting that there had also been a shift from the informal to the formal employment sector.

"When the neoliberal recipe is you have to take austerity measures, cut education and health care ... Brazil went the opposite way," he continued. While the external flow of goods has declined, a strong internal market has maintained demand, even if something of a slow down is expected.

Earlier in the conference, Luiz Kohara of the Gaspar Garcia Centre for Human Rights noted that while Brazil ranks sixth in terms of GDP, it is a position 84 on the Human Development Index. Still, infant mortality has declined from 120.7 to 15.6 between 1970 and 2010, life expectancy has increased from 57.6 to 73.4 and the illiteracy rate has declined from 33.6% to 9.6%.