Brazil's Anti-Inflation Plan Hits Wave of Public Doubt
Great expectations yield to federal fumbling that has many fuming
SAO PAULO, BRAZIL — BRAZIL'S drastic anti-inflation plan, just over two months old, has entered a new and difficult phase. ``It is the end of the honeymoon,'' says Luis Eduardo do Assis, Central Bank director of monetary policy and an author of the ``Collor plan,'' as the government's program is known.
Disillusionment was to be expected, he and others explain, because public hopes were too high.
But falling confidence could hurt the plan's chances for success, political analysts say. Public cooperation is needed because President Fernando Collor de Mello's administration lacks the power to fully implement its program without broad backing.
Support began to founder last week when the government imposed a new tax and a federal pay cut - then revoked both because they were found unconstitutional. ``At first I was scared. Like everyone else, I felt paralyzed and shocked,'' says a Sao Paulo antiques dealer. ``Then I had a Pollyanna sort of reaction, I felt that it had to work. ... But then came all the backing and forthing of the measures, with [Economics Minister Zelia Cardoso de Mello] saying one thing one day and something else the next.''
Dissatisfaction with the plan grew when Bras'ilia announced Wednesday that workers and employers must negotiate wages without the traditional government umbrella protecting workers from inflation. Unions say that will hurt wage-earners, since rising joblessness puts them in a weak bargaining position already.
Jair Meneguelli, president of the largest workers' confederation, Central Unica de Trabalhadores, put it bluntly to the O Estado de Sao Paulo newspaper: ``The government's incompetence ditched all the campaign promises,'' of President Collor.
Brazil's Congress, once passive toward the Collor plan, is drafting a policy to index wages to prices.
Just after the plan was introduced, opinion polls tallied approval rates of more than 80 percent. Last week, a DataFolha poll found that 54 percent of those surveyed support the plan.
Top military officials, quiet until now, had begun criticizing the president two weeks ago. Their daring evoked memories of the 1964 military coup for many Brazilians.
Inflation has indeed fallen from 84 percent in March to 3.3 percent in April. Two weeks ago, the government lifted most price controls. But with none of the usual government-decreed cost-of-living increases, many Brazilians are nervous. ``People are marking up prices like before,'' a businessman says. ``I saw them go from 30 percent to 35 percent just last week.''
Many economists condemned the government's attempt to raise taxes. ``This decision is so contaminated by the political wear and tear of the economic team in the last few days ... that a good idea may be thrown away,'' says Dionisio Carneiro, an economics professor at the Rio de Janeiro Catholic University.
Resistance is growing. On Thursday, 50,000 Sao Paulo autoworkers voted not to accept wage and workweek reductions proposed by employers to adapt to falling car sales. And public transport workers are planning a nationwide one-day strike May 22.
Yet, public support is vital for two parts of the plan still pending. On June 18, Mr. Collor's ministers are scheduled to unveil plans to cut the government payroll by up to 25 percent, or 400,000 workers. A push toward privatizing 190 state factories and businesses is expected in August.
Now, however, voters who opposed Collor's election last fall are beginning to organize opposition. A group of Sao Paulo professionals met last week to begin a movement to defend the Constitution, which many legal experts agree the Collor plan ignores.
Many economists and businessmen are calling on the government to put trade, administrative, and privatization reforms into effect quickly. The aim: to cut spending and show the public the burden is being shared.
Even Collor is said to place daily phone calls to his ministers, pushing for action on his promise to lay off 350,000 public servants from the top-heavy government. But the bureaucracy's survival instincts are getting in the way.
``You can't move a secretary without the union getting in the middle,'' a top official told a businessman last week. Though he has a staff of 500 people, his work could be done with 50, he said.
Government officials readily admit mistakes. Still, they hope long-term reforms, like a liberalized import policy, will pay off soon. ``We have to get more things right and make fewer mistakes,'' sighs Mr. Assis, the Central Bank official.