Brazil’s President Unveils Economic Reform Plan

RIO DE JANEIRO — Brazilian President Itamar Franco, shrugging off mounting criticism of government inaction, announced Saturday a broad plan of economic reform intended to combat everything from hunger and homelessness to recession and financial speculation.

Outlined during a Cabinet meeting in Brasilia, the ambitious, three-tiered plan proposes to slash public spending, put Brazilians back to work, and feed and house the estimated 32 million Brazilians living in chronic misery.

Franco made a special target of financial speculators, whom he charged with stoking the incendiary inflation rate, and announced measures to dampen investment in short-term assets. “There are those among us who still practice savage capitalism,” he said.

Finance Minister Eliseu Resende, the architect of the plan, declared that the mixture of austerity, a crackdown on tax chiselers and increased public spending will curb Brazil’s soaring monthly inflation rate from 30% to 20% and stimulate the depressed economy to grow 3.5% this year.

The plan also contains several costly investments, such as $590 million to rebuild highways.

While giving few details, Resende said that financing will come from a 10% reduction in the budgets of state enterprises, a hike in utility rates and the sale of shares in state companies, which will raise public revenue by 20% this year.

Most significant, the plan contains none of the shock measures to which Brazilians have become so accustomed in recent years, such as wage freezes and seizures of bank assets.

“The savings of the poor, workers, the middle class and business are untouchable,” Franco said.

Franco took office when former President Fernando Collor de Mello was impeached last September after a corruption scandal. Since then, he has ruled timidly, without a comprehensive economic strategy. Two economic ministers came and went, and critics feared that Franco would roll back the liberal economic reforms of the Collor era.

The plan appears designed in part to stanch such criticism. “Only those of bad faith could accuse this government of immobility,” Franco said.