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Brazil's slash-and-burn budget cuts chop even foreign aid

By Gustavo A.B. da Fonseca / February 10, 1999



As Brazil attempts to stabilize its currency by making deep cuts in federal spending, an ironic detail could strip the country of much of its environmental protection. No one at the budget-cutting table seems to recognize that some of the money being chopped from federal spending is actually foreign assistance - often destined for environmental programs.

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In Brazil, environmental programs are so marginalized and politically unimportant that most of the spending for environmental initiatives comes from international financial institutions as loans. Yet even counting foreign aid, Brazil's total spending for environmental programs is roughly one-half of 1 percent of the entire spending bill. Will eliminating this small amount really make a difference in the overall spending package?

The budget cutting is part of the October agreement Brazil signed with the International Monetary Fund (IMF) and multilateral banks. The IMF agreement aims to provide $41 billion to bolster Brazil's currency, the real, against speculative attacks. It's understandable that deep budget cuts to bring about stability are never easily accomplished.

But the Brazilians proposing to cut spending for the environment clearly aren't paying attention to how the environmental sector is funded. All told, proposed cuts will eliminate between 80 and 90 percent of the international aid to Brazil for environmental projects. Neither are the budget cutters acknowledging what is at stake - Brazil's vast plant and animal species diversity and the most significant virgin rain forests in the world. Brazil's natural treasures are already in peril. Some 15 percent of the Amazon is lost, and the Atlantic forest is down to 8 percent of its original cover. Two-thirds of the Cerrado Savanna in central Brazil is converted to cattle pastures and cash crops.

Because of its richness of life coupled with its endangerment, Brazil was an ideal venue for the largest gathering of world leaders in history - 1992's Earth Summit. Many bold programs to conserve and rationally use Brazil's biological resources were born at that landmark event. Funding to carry out the programs came from numerous agencies, including the World Bank, the InterAmerican Development Bank (IDB), the Group of Seven, and the Global Environmental Facility.

A significant Earth Summit initiative affected by the budget cuts is the Pilot Program to Conserve the Brazilian Rain Forest. Some 91 percent of the $63.7 million of anticipated foreign assistance through this program will be cut. Likewise, the Global Environmental Facility's Brazil Biodiversity Project, administered by the World Bank, will lose 50 percent of its foreign-aid budget. If the Brazilian co-financing is also cut, the program will suffer a total cut of 88 percent. Completely written out of the proposed budget is a loan agreement with the IDB, now in its final stages of negotiation, destined to fund the second phase of Brazil's National Environmental Program.

The cuts will mean less spending on the environment in Brazil than even before the Earth Summit. Financial institutions like the World Bank and the IDB must let Brazil's government know that they do not approve of these thoughtless cuts. They have the clout, considering the enormous amount of money flowing into Brazil for other programs. By not objecting to the environmental cuts, they tacitly approve them. These institutions must ensure that whatever economic remedies are prescribed don't curtail a nation's opportunity to develop with a sound environmental foundation.

History tells us economic crises can come and go. For Brazil, if the environment is irreversibly damaged in the process, it will be much tougher for its economy to recover the next time.

*Gustavo A.B. da Fonseca is director of the Center for Applied Biodiversity Science at Conservation International in Washington, D.C.