Brazil Budget Cut Injures Environment Ministry

By David Dudenhoefer

BRASILIA, Brazil, March 3, 2003 (ENS) - A recent cut in Brazil's federal budget of 14.1 billion reals (nearly US$4 billion) could make it difficult for the country's Environment Ministry to maintain its varied programs.

Last month the administration of President Luiz Inacio Lula da Silva, popularly known as Lula, announced a "temporary" cut of nearly 23 percent from the federal budget for 2003, promising that funds would be reinstated if the economy improves. The Environment Ministry's budget was slashed by almost 57 percent, from approximately 786 million reals (US $220 million) to 340 million reals (US $95 million), although the ministries of Health, Education, and a new program to combat hunger suffered only minor cuts.

President Luiz Inacio Lula da Silva of Brazil (Photo courtesy Office of the President)

The Lula administration cited several reasons for the budget cut, but observers note that it is closely linked to a decision to raise the target for the country's budget surplus from 3.75 percent of gross domestic product - a level demanded by the International Monetary Fund last year - to 4.25 percent of gross domestic product.

Lula may have little choice since he needs to boost the value of Brazil's national currency, the real, which fell significantly against the dollar once it became clear he would win the presidency. Brazil is scheduled to pay more than $7 billion of its foreign debt this year, much of which is pegged to the U.S. dollar.

"It's very bad for a new administration to begin by the cutting budgets," said Adriana Ramos, a public policy expert at Brazil's Instituto Socioambiental. Though she admitted that the Lula administration is in a difficult position, she lamented the decision to continue a trend established by the previous government, which cut the Environmental Ministry's budget several years in a row.

Ramos claimed this budget cut is not as severe as it appears, since the original 2003 budget allocated much more money for the Environment Ministry than was spent the previous year. She explained that after the cut, the ministry's budget is only about 15 percent less than what it spent in 2002.

Seasonal rainforest in bloom in eastern Brazil (Photo courtesy U. Texas-Austin)

Ramos said a priority for the ministry is to prevent the budget cut from effecting bilateral projects that require the Brazilian government to match foreign contributions.

"If Brazil doesn't pay its part, it won't be able to use the foreign funds," she said. "By guaranteeing its matching funds, [the ministry] can guarantee that most of its programs will be maintained."

Ramos said that the current situation presents a special challenge for nongovernmental organizations. "We need to get resources from other sources, such as international cooperation and private enterprise," she said.

While some countries have cut foreign aid to Brazil in recent years, on the grounds that it is in better shape than many African and Asian nations, Ramos noted that her country still needs help to protect its vast natural resources.

"The conservation of biodiversity and environmental services in Brazil is a global concern," she said.