The IMF Domination of Brazil

A Verdade

With the money used to pay interest, the government could build 15 million public housing units each year.

While the people go hungry,
the speculators get rich.

35 million Brazilians do not have their own home.

The big media are constantly disclosing cases of corruption in the government of the PT / PCdoB / PL [Workers’ Party / Communist Party of Brazil / Liberal Party – translator’s note], but with respect to the biggest of these cases – the payment of the enormous interest on the external and internal debt – there is not one word in, for example, newspapers such as O Globa e Folha de S. Paulo or in the weekly magazine Veja.

In fact, in the two first years of Lula’s government (2003 and 2004), 273 billion reals [about $115 billion US – translator’s note] were spent on the payment of the so-called public debt – the debt of the National Government, States, municipalities and state enterprises. This year, according to the Central Bank of Brazil, the government spent the fortune of 155 billion reals [$65 billion US] on interest. Thus, in three years, the Lula government will have depleted the public coffers by no more nor less than 428 billion reals [$180 billion US].

While paying all this fortune in interest, however, the public debt has not diminished; it has grown. In December of 2002, it was 881.108 billion reals [$370 billion US] and, in May of this year, it had reached 957.570 billion reals [$402 billion US], or 50.3% of the Net Internal Product (NIP). In just the last year, it grew by 84 billion reals [$35.28 billion US]. And the Central Bank expects that, in December of this year, it will reach the astronomical sum of 1.24 trillion reals [$430 billion US].

Thus, instead of paying attention to the 35 million Brazilians who do not have their own home, or the 54 million who live in poverty, the 3.5 million students who are not able to enter public university or the 150 million Brazilian citizens who suffer from the chaos in public health, the government prefers to give aid to the insatiable owners of titles to the external and internal debt, that is, the speculators.

It is worth recalling that this same sector, the parasitic owners of the titles to the external and internal debt, have already benefited from public moneys during the eight long years of the government of FHC [former president Fernando Henrique Cardoso – translator’s note]. That is, the government of the PT / PCdoB / PL adopted the same economic policy as the PSDB [Social Democratic Party of Brazil, FHC’s party – translator’s note], characterised by privileges to big finance capital at the cost of hunger, unemployment and poverty of the Brazilian people.

The big bourgeois media see nothing scandalous or terrifying in this because, for them, the State exists only to serve the wealthy classes. To guarantee these gigantic expenses such as interest paid to the national and foreign capitalists, the government cuts funds for education, health and housing, thereby obtaining a large surplus, that is, economising to the maximum with the aim of paying interest to the speculators. This year, for example, the surplus will be 83 billion reals [$35 billion US], but since Brazil has to pay 155 billion reals [$65 billion US] in interest, it will be necessary to withdraw more than 72 billion reals [$30 billion US] from the public coffers to complete the payment. It seems to be a lie, but it is the truth.

One of the forms by which the government gains more money to pay the interest on the debt is to collect more taxes from the people. Thus, from January to May of this year, it collected 146 billion reals [$61 billion US] in taxes. As the capitalist owners of industry and stores transfer to the prices of the products the taxes that are collected from them by the government, the workers (the real consumers) end up paying the for the spending spree that the speculators are going on with public money.

What is worse is that a great part of the problems of Brazil could be resolved if this fortune was diverted from paying the interest on the public debt were invested in social services. Let us see:

The IMF Continues to Dominate the Brazilian Political Economy

As we have seen, it is a matter of a gigantic diversion of public money into the hands and stocks of a tiny minority of rich families, in order to pay a debt which, as we all know, has already been paid off dozens of times over. In fact, the calculations of the Central Bank of Brazil itself show that, from July 1994 to July 2005, the country will have paid a total of 1 trillion reals [$420 billion US] in interest for the public debt. Meanwhile, 47% of families were not able to buy the food that they need and 27 million children continue to live below the poverty line.

There is no doubt that this is the greatest scandal in the country, corruption linked to the debt continues to increase and the suffering of the immense majority of the Brazilian population is increasing with unemployment, the chaos of health care and the lack of housing. Thus, even though the Brazilian government has not signed a new accord with the International Monetary Fund, the IMF continues to dominate the political economy of the country. In other words, contrary to what Lula and his minister Palocci are saying on television, Brazil has not thrown the International Monetary Fund out the front door by not signing an accord, but it has thrown the doors and windows wide open for finance capital.

The Editors

Interest on debt paid by the State

2003 145 billion reals [$61 billion US]
2004 128 billion reals [$54 billion US]
2005 155 billion reals [$65 billion US]
Total 428 billion reals [$180 billion US]

Source: Central Bank

July 2005

Translated from the Portuguese by George Gruenthal

Click here to return to the September 2005 index.