[Brazil] needs more growth to hit poverty: World Bank

From The Washington Post


By Angus MacSwan
Reuters
Tuesday, December 20, 2005; 3:59 PM

SAO PAULO, Brazil (Reuters) - Brazil's economy needs to grow at a much higher rate to successfully combat the extreme poverty in which millions of its people live, World Bank President Paul Wolfowitz said on Tuesday.

"I think Brazil can and could do better and I think that's essential for fighting poverty," Wolfowitz said at a news conference in the country's financial capital, Sao Paulo.

Wolfowitz, visiting Latin America's largest country for the first time since he was elected World Bank president in March, said Brazil had made progress but a lot needed to be done.

Extreme income inequalities meant that the benefits of economic growth had not done as much to reduce poverty in Brazil as it had in other countries, he said.

"Real poverty reduction is going to require growth rates higher than Brazil has been achieving," he said.

Around a third of Brazil's 186 million population is estimated to live below the poverty line.

President Luiz Inacio Lula da Silva's government has pledged to wipe out poverty but is following tight fiscal policies to get the economy on a sound footing rather than throw public money at the problem.

Although the country is enjoying an investment boom, growth under the Lula government is expected to average a meager 2.89 percent -- well below the 5 percent analysts see as a minimum needed to alleviate poverty. The economy shrank 1.2 percent in the third quarter of 2005 from the second.

Wolfowitz said he had excellent meetings with the president and his finance minister Antonio Palocci, architect of the economic strategy. At the outset of his trip -- which took him from the settlements of the Amazon jungle to the slums of Sao Paulo -- he had praised their efforts.

On Tuesday, he lauded the government's "bolsa familia" plan -- a flagship social program that gives income support to 8 million poor families -- as a real success and said it could be emulated in other countries.

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Education in Brazil is a problem, though, and the public system needed great improvement and an educated population of all social classes, besides being a social right, could promote economic growth, he said.

Wolfowitz also said Brazil's business environment is a problem. "One of the obstacles to increasing Brazil's growth rates and creating jobs for the poor and resources for investment is the climate for business is a very, very challenging one."

The Lula government is trying to push through tax, labor and other reforms sought by investors but has limited success so far. Bureaucracy is also stifling.

With regard to the Amazon, Wolfowitz said difficulties lay in the path of achieving development and protecting the environment.

The World Bank could help bring together competing interests there as well as foreign governments and other organizations who were interested in seeing social and economic development without destroying the vast rain forest.

"Environmentally friendly growth that includes populations that have traditionally been left behind, who are locked in a cycle of poverty, is possible," he said.