Brazil's Franco, His Office Intact, Unveils Economic Plan

BRAZILIAN President Itamar Franco announced a $15 billion plan of action on April 24 aimed at stabilizing the economy, improving the lot of the abject poor, and stimulating growth, just three days after the majority of the country's 90.2 million voters chose to stick with the presidential republic as their form of government.

The plan includes about $8 billion in agricultural subsidies, $2 billion for housing, cuts in state spending, and increases of about $10 billion in the government's tax revenues.

Mr. Franco now embarks on negotiations with a group of center and center-left parties, representing a majority in Congress, aimed at shoring up his government for its remaining 20 months in office. This process will almost certainly result in a Cabinet reshuffle in May, in which at least five ministers are likely to be replaced.

A number of the political forces in the broad alliance that backed Franco when he was sworn in last December are now jumping ship in preparation for next year's election. His success in getting congressional approval for his economic plan - which seeks to fight Brazil's 27 percent monthly inflation and pull the country out of a three-year recession - will demonstrate his ability to forge new support to see him through 1994.

While almost 40 percent of the electorate abstained or spoiled their votes at the plebiscite on Brazil's system of government, the majority voted to retain the present one. With some 85 percent of votes counted, results show that around 67 percent opted for a republic rather than a monarchy, with 56 percent preferring the presidential over a parliamentary system.

THE way is now clear for presidential candidates to begin campaigning for the November 1994 election. The two candidates leading the opinion polls represent a left-right split, with Workers' Party president Luis Ignacio (Lula) da Silva running at about 22 percent, and Sao Paulo's conservative Mayor Paulo Maluf, from the Progressive Reform Party, at 15 percent.

Mr. Da Silva was defeated by right-wing Fernando Collor de Mello in the last presidential race, in 1989. Mr. Collor was ousted in December on charges of corruption, resigning at the 11th hour to avoid impeachment, which opened the way for Franco, then vice president, to take over. Da Silva hopes to capitalize on the backlash against Collor's neoliberal economic program to reach the presidency this time around, while Mr. Maluf's strongest argument will be the batch of projects he will implement in the cou ntry's biggest city, Sao Paulo, with 13 million inhabitants.

Prices soared last week as retailers sought to defend themselves against controls or even a total freeze April 24. The price of onions shot up 30 percent over the last week, while a box of soap powder rose 20 percent in just three days.

Having opted not to change their country's political organization, however, Brazilians now face not only a 19-month presidential race, but also an October review of the Constitution promulgated in 1988. Facing the country's legislative powers will be such major tasks as an overhaul in political representation. The poorest and most backward states in the country, located in the north, northeast, and center-west, hold 37 percent of the population, yet control 55 percent of seats in the Congress, a clear di scrimination against the richer, more developed states of the south and southeast.

Also on the agenda for change will be constitutional discrimination against foreign capital in such key areas as mining, and against all forms of private capital in areas in which the state currently holds a monopoly, such as oil refining and telecommunications.