New Brazil President Sets His Course : Latin America: Itamar Franco vows to lead nation out of recession, poverty and corruption. He faults predecessor’s ‘false modernity.’

In his first speech to the nation, Itamar Franco, Brazil’s new president, promised Wednesday to lead Latin America’s largest country out of recession, poverty and corruption and to set it on a course away from the “false modernity” of his disgraced predecessor, Fernando Collor de Mello.

Franco, who had been acting president since Collor was impeached on influence-peddling charges on Sept. 29, formally assumed office on Tuesday. He took office after Collor, facing a Senate trial, resigned.

“I am proud that the nation has had the power to overcome one of its most serious political crises,” he told the ministers assembled in the presidential palace. “With the patience of justice, we can recoup the principles of justice that are the pillars of our nation.”

While his speech began with words aimed at healing the wounds caused by the corruption scandal that has gripped this country since last May, most of Franco’s speech dealt with Brazil’s difficult economic position and his intent to dispense with Collor’s tough, free-market reforms.

Since taking office in March, 1990, Collor had fought for lower tariffs, reduced spending, better tax collection and privatization of state-owned industries with almost missionary zeal.

Franco leveled his toughest talk at the deepening, decade-old recession, which was exacerbated by Collor’s attempt to balance Brazil’s chaotic accounts with budget cuts. Brazil has also been afflicted with 1,000% annual inflation, sky-high interest rates and a shrinking gross domestic product.

“We all want to modernize the country and we will modernize it, (but) without making the middle-class poor and without aggravating the suffering of workers,” Franco asserted. “Modernization and the fight against inflation cannot be based on the maintenance of high interest rates . . . of almost 30% per year.”

Franco promised to force rates down to 20% in coming months and said he will change the country’s ambitious privatization program.

Pledging to increase spending on social programs and the infrastructure, he said he will “kick-start” the economy with a “rigorous selection of government spending” and reform of the tax system.

Government officials say 50% of Brazilians evade taxes, and the government is almost bankrupt; in November, it posted its first monthly budget deficit since Collor took office; 60% of revenues go to financing the country’s debt.

Immediately after Franco finished his half-hour address, Collor made his first speech as a former president, vowing to fight on.

Collor has denied that he had any role in a multimillion-dollar influence peddling scheme.

“My judgment will be in history and I will not desert the fight,” he said. “My only crime is that I believe that we could change this country and modernize it.”

Collor resigned just as the Senate was expected to convict him of abusing his office and to formally strip him of the presidency. Even though he quit, the Senate continued its trial and found him guilty of official misconduct in a 76-3 vote.

Collor was thereby stripped of the right to hold public office for eight years.