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Brazil's Lula Urges Workers' Party to Back Austerity

  • Reuters

FILE - Brazil's former President Luiz Inacio Lula da Silva, right, looks at a document with Brazil's President Dilma Rousseff during a Central Workers Union convention in Sao Paulo, Brazil, Oct. 13, 2015.

FILE - Brazil's former President Luiz Inacio Lula da Silva, right, looks at a document with Brazil's President Dilma Rousseff during a Central Workers Union convention in Sao Paulo, Brazil, Oct. 13, 2015.

Former Brazilian president Luiz Inacio Lula da Silva urged the ruling Workers' Party on Thursday to back fiscal austerity measures in Congress, endorsing the efforts of Finance Minister Joaquim Levy to plug a gaping deficit.

Members of Lula's leftist party have opposed moves by Lula's protégée, President Dilma Rousseff, to cut public spending and social benefits as she strives to balance overdrawn accounts and restore investor confidence in Brazil.

Lula said Brazil had no alternative but to tighten belts to pull the economy out of its deepest slump in decades. The party's future depended on it, he warned party leaders at a meeting.

The party, blamed for unemployment, high inflation and a massive corruption scandal at state-run oil company Petrobras, is facing its worst crisis since Lula became president in 2002. Many members fear serious setbacks in local elections next year if the austerity policies are not dropped.

But Lula, speaking next to leaders who have called for Levy's head, said the Rousseff government had to maintain its course because fiscal revenues have fallen in the recession and there was no money for investments to stimulate the economy.

"The only way to recover the prestige of the Workers' Party is to restore economic growth," Lula said, asking the party's lawmakers to vote for the revival of despised financial transaction tax known as the CPMF proposed by Levy.

Speaking to investors in London earlier, Levy said consensus around his fiscal plan had grown "little by little" and he expressed confidence the measures will get through Congress.

Lula, who has not ruled out running for Presidency again in 2018, is still Brazil's most influential politician though his popularity has tanked and corruption allegations threaten his legacy of lifting millions of Brazilians from poverty.

He has been questioned by prosecutors about the Petrobras kickback scandal that ensnared dozens of his allies in a widening probe. He is being investigated for alleged influence trafficking and on Monday police raided a company owned by one of his sons as part of a bribery investigation.

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