allAfrica.com: South Africa: The Official Line (Page 1 of 1)

BRAZIL and SA are not only both considered important emerging markets, but share a history of authoritarian rule and profound poverty. Marja Tuit spoke to Brazilian ambassador José Vicente de Sa¡ Pimentel.

The world faces recession, yet Brazil's economy achieved its fastest rate of growth since 2004 last year. How so?

President Luiz Inacio Lula da Silva likes to say that the good performance of the economy is due to long-term measures that have begun to bear fruit. For some time now, the federal government has pursued fiscal austerity with a view to increasing the government's capacity to save and invest. The government has implemented social policies to support small and medium enterprises, foster employment and to increase the revenue of families, such as the Bolsa Familia programme (family basket) which provides a financial aid programme and household energy subsidies. The consequence has been a remarkable reduction of social disparities, and increase of average purchasing power and the enlargement of the domestic market.

Rating agency Standard & Poors promoted Brazil to investment grade in April. Was this significant?

The upgrade reflects the consistency of the social and economic policies that have been implemented for the past few years. It helps attract foreign direct investments -- important support for the government's commitment to long-term economic stability.

Brazil is the world's most efficient producer of bioethanol. Is the worldwide increase in biofuel production justified given the effect it is having on food prices?

There are no subsidies or protectionist measures to favour production of Brazilian biofuels. Since it is economically profitable, it is wholly carried out by the private sector, according to market forces, without interference from the government. Brazilian biofuels do not contribute to the increase of food prices and do not put stress on existing land and water supplies.

Recent data related to the 2007-08 harvest show that the advancement of biofuels production in Brazil does not compete with food production. Sugar cane land has grown by 630000ha -- a growth of 12% in comparison to the previous harvest -- and the production of grains has grown 6,8%, with an increase of 1,1% in the cultivated areas.

Brazil also faced a major electricity crisis in 2002. How did you manage to overcome this?

Brazil relies 90% on hydroelectric power. In 2001, due to a drought, the reserve of our hydroelectric stations fell substantially, leading our government to take urgent measures to save electricity and expand the capacity of energy production. In May 2001, it created the Committee of Administration of the Electric Crisis, an inter-ministerial group.

The committee succeeded in reducing the effect of the energy crisis on the economy, but there have been longer-lasting effects too: the country has learned to save energy and has recognised the importance of the efficient use of energy. Another effect was consciousness of the importance of developing renewable alternative sources of energy. Foreign Affairs Minister Celso Amorim, in discussions with South African Foreign Minister Nkosazana Dlamini- Zuma, has offered technical assistance to help SA overcome its current energy crisis.

Brazil launched a growth accelerating plan (Programa de Aceleracao do Crescimento, PAC) last year. Is it bearing fruit?

The PAC was launched by Lula in January last year and is a wide-scope programme with two big clusters. The first encompasses building infrastructure for the development of transport, sanitation, housing and water resources. The PAC will also grant fiscal deductions to encourage investment in new technologies, such as semiconductors, equipment related to digital TV, and steel production. The second cluster involves economic measures to foster growth. One of the basic ideas is to reduce public spending to foster investment and promote economic stability.

The PAC forecast economic growth of 4,5% last year, and 5% this year and in 2009 and 2010.

The reality proved better than our expectations: the Brazilian economy grew 5,4% last year and the rate between January and March was 5,8%.

What is the outlook for Brazilian agriculture?

The greatest obstacle is the protection given by developed countries to their inefficient agricultural sectors. This encompasses high tariffs on imported agricultural goods, non-trade barriers, subsidies, domestic support and other measures that distort trade. That is why Brazil, along with SA and other countries of the G-20, are struggling at the World Trade Organisation to eliminate protectionist measures . The liberalisation of the agricultural market will certainly help developing countries and contribute to solving the world food crisis.

Brazil has been among the world's leading recipients of foreign direct investment in recent years. To what do you attribute this success?

Brazil has become less vulnerable to global turbulence because of: fiscal prudence and economic stability; the expansion of exports; growth in foreign reserves; and improvement to all indicators related to external vulnerability.

The South American common market, known as Mercosur in SA, also functions as a customs union. Do you foresee an increased flow of trade between Mercosur and SA?

The goal is to sign a free trade agreement between Mercosur and the Southern African Customs Union. A preferential trade agreement was signed in December 2004, and affected 950 products from each side. It was agreed then that some specific areas of the agreement would be negotiated later and this process continues.

Brazil has won the Soccer World Cup five times and will host it in 2014. Are Brazil and SA co-operating in this respect?

In March this year, a Brazilian delegation from our tourism ministry visited SA to find out which South African experiences could be replicated in Brazil.

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