Brazil continues to be one of the leading countries in the
world in income inequality, occupying sixth place alongside
such extremely poor countries as Namibia and Swaziland. Between
January and August of 2003, expenditures with interests on
the public debt reached 102.4 billion reais, 68% more than
during the same period of 2002. These expenses represent three
times the allocation of the federal government to health,
334 times the spending on housing, and 10.2% of the gross
national product, or around 30% of all expenses at the three
levels of government.
and Internal Debt and
Human Rights in 2003
payment of debt constitutes a systematic, flagrant, massive,
and persistent violation of economic, social, and cultural
rights. Billions of reais (the Brazilian currency) are withdrawn
from public funds for the payment of external and internal
debt. Brazil must constantly contract new loans, in foreign
currency, to cover the payment of previous debts.
addition, the social and environmental debt increases, as
well as poverty and the concentration of income and wealth.
The result is environmental degradation and further extraction
of natural resources.
"Atlas of Human Development"1
indicates that the inequality of income in Brazil increased
between 1991 and 2000, meaning that fewer people hold more
of the income in the country. We continue to be one of the
leading countries in the world in income inequality, occupying
sixth place alongside such extremely poor countries as Namibia
January and August of 2003, the expense with interests on
public debt reached 102.4 billion reais, 68% more than in
the same period during 2002. Federal, state, municipal, public
funds, the central bank, and state agencies make these payments
to the international banks, investors in the stock market,
the International Monetary Fund (IMF), the World Bank, the
Interamerican Bank, and other governments. These expenditures
represent three times the federal expenditure on health, to
334 times the allocation for housing, and to 10.2% of the
gross national product, or around 30% of all expenses at the
three levels of government.
1998, an agreement with the International Monetary Fund (IMF)
restricted public expenditures at federal, state, and municipal
levels. The Brazilian government started to collect taxes
mainly for the purpose of paying the external debt. The so-called
primary "surplus" (excess of proceeds over public
expenditures reserved for paying the debt) of the federal
budget reached R$ 49 billion by August. Total expenditures
on social programs by July of that year reached approximately
R$ 40 billion, while payment of the services (penalties and
interest), on both the internal and external debt, reached
R$ 53 billion (see the table).
situation in 2003 worsened due to the last renegotiation of
the agreement with the IMF in 2002, enacted in March of 2003.
Among other conditions, it was stipulated that the primary
"surplus" of tax proceeds over public spending be
4.25% of the gross national product. In 2002 it was 3.85%.
This target caused cuts in social expenditures of R$ 54.2
billion by September, according to the goal established by
the total sum of resources generated for the primary "surplus,"
it would be possible to construct 2,465,000 houses, 35 square
meters in area on lots of 200 square meters, at a cost of
R$ 25 million. It would be possible to increase by 29 times
the funds for Fome Zero (Zero Hunger campaign).
the Federal Government's Budget
The numbers below summarize the budget for actual expenditures
in the period between January and July, 2003.
Government - Report of Budget Expenditures
to July, 2003
Selected Items / Budgeted for year / Expended by July / %
Public Security / 2,763,243 / 1,082,738 / 39.18
Social Assistance / 8,611,537 / 3,944,988 / 45.81
Health / 27,783,936 / 13,548,355 / 48.76
Education / 14,518,836 / 6,411,900 / 44.16
Culture / 348,555 / 79,571 / 22.83
Urbanization / 912,976 / 21,880 / 2.40
Housing / 296,063 / 0 / 0.00
Sanitation / 224,239 / 171 / 0.08
Environment / 2,329,203 / 264,906 / 11.37
Science and Technology / 2,093,428 / 679,370 / 32.45
Agriculture / 8,998,344 / 2,015,066 / 22.39
Agrarian Reform / 1,599,299 / 242,870 / 15.19
Energy / 2,138,639 / 837,947 / 39.18
Transportation / 5,394,047 / 614,393 / 11.39
Total of Social Expenditures / 78,012,345 / 29,744,155 / 38.13
Service on the Debt / 141,185,711 / 53,583,212 / 37.95
Service on the Internal Debt / 110,450,648 / 38,474,979 /
Service on the External Debt / 30,735,063 / 15,108,233 / 49.16
is a very simple table. It demonstrates, through some selected
items - health, education, sanitation, agrarian reform, etc.
- how much was allotted for expenditures on each category.
And, finally, in the last column, the percentage value of
how much was spent in relation to the total budget.
some items like health, education, and social assistance,
what was spent until July corresponds proportionally with
a graph of expenditures divided evenly by the months of the
year: data was collected in July and these expenditures are
approximately 50% of that foreseen for the year. In items
like housing, transportation, sanitation, agrarian reform,
and environmental activities, expenditures are far below the
allocation; the most extreme example is housing, where nothing
was spent from the federal budget. This absence of expenditures,
for certain, is not the result of a lack either of people
who need shelter, of popular organization demanding housing,
or of unproductive urban or rural areas that might be used.
The primary surplus cut, in February of this year, 87% of
the budget for the Ministry of Cities. In other words, to
reach a cut of R$ 54.2 billion accepted by the IMF, the Brazilian
government "took the scissors to" and "tightened
the belts of" social programs.
In this way, a social moratorium has been decreed for those
who need the 6.6 million homes that were to be constructed
or the reforms to 15 million houses that were considered inadequate.
A suspension of payment has been decreed for the social debt
to the 53 million people who live in misery and in poverty
to the table, in the item "service of the debt"
(penalties and interest), almost R$ 53.6 billion was spent
servicing financial debt. This would give enough to spend
a million reais on each million people that live in exclusion,
in this interval of six months alone.
International Agreement on Economic, Social, and Cultural
Rights, adopted as Resolution 2,200-A (XXI) by the General
Assembly of the United Nations, on December 16, 1966, and
ratified by Brazil on January 24, 1992, established a series
of rights that the member-states ought to seek to respect.
Its first article recognizes the right to self-determination,
the right for member-states to define their own political
statutes, and the right to freely secure their economic, social,
and cultural development.
recover a right to shelter from the financial debt as a prerogative
of sovereign states should be proclaimed as a condition for
the fulfillment of the International Agreement on Economic,
Social, and Cultural Rights.
the external debt, the internal debt also violates human rights.
According to research by the Revista Carta Capital (August
13, 2003), between trades, exchange, penalties, commodity
transactions, derivatives, and titles on the external debts,
around R$54 billion is moved each day in Brazil. The greatest
part - R$ 52 billion - is exchanged in the Bolsa de Mercadorias
e Futuros (the market in stock and futures) in São
Paulo. The "Paulista Casino" attracts investors
from the whole world to enter into their negotiated contracts
in state bonds and actions, in debt titles, in commodities,
and in similar financial instruments. So-called investors
enter and leave these contracts, that is, enter and exit from
the country, with complete facility, without control. 2
Market, depending on its mood, indirectly defines whether
or not cuts will be made in social investments with a variety
of mechanisms, such as the value of the dollar and indices
such as the Brazilian investment risk. The increase of the
primary surplus from 3.85% to 4.25% means, in practice, cuts
in spending in the social area like the guaranty of payment
of high interest and high investments to so-called foreign
investors. The greater portion of public spending, according
to both the Federal Government of Brazil and the IMF, ought
to be directed to the payment of debt financing.
this mechanism, the internal debt today consumes the greatest
volume of payments. On table 1 we see that, of the R$ 141.2
billion paid to service the public debt, R$ 110.3 billion
was destined to the payment of internal debt.
debts are the result of a political and economic choice. Therefore,
to at least begin the payment of the social and environmental
debts, the social moratorium needs to be lifted and a financial
for action 3
the campaigns for debt cancellation, we have been working
to investigate the link between debt and violation of human
rights. During the World Social Forum in 2003, we organized
various activities in order to build a working plan. Here
are some proposals:
To seek forms to show the responsibility of the IMF and other
international financial organizations regarding these policies,
which cause poverty and hunger;
· To investigate, denounce, and demand reparations
in cases in which loans were used to sustain dictatorships;
· To study and use legal arguments - Odious Debt, Greater
Force, etc. - to work for canceling the debt;
· To call for the end of structural adjustment programs;
· To change the idea that we have a debt, since people
in the South are creditors of a historic, ecological, social,
and political debt;
· To denounce the responsibility of the IMF and other
international financial organizations for the fiscal and structural
adjustment policies that are creating so much poverty and
hunger in the countries of the South.
External Debt, 1999 to 2003, in billions of US dollars.
External Debt / 1999 -Dec/ 2000-Dec / 2001-Dec / 2002-Dez
Public Debt / 100,682 / 92,358 / 93,182 / 110,420 / 114,347
Private Debt (1) 140,786 / 143,798 / 132,886 / 117,269 / 119,345
Total External Debt / 241,468 / 236,156 / 226,067 / 227,689
/ 233,692 / 236,010
Source: Banco Central
(1) Includes the debt of the public financial sector.
Debt, 1999 to 2003: How much was paid in billions of US dollars
Debt in 1998 (Dec) 220.350
Interest (Jan 1999- Aug 2003) 161.530
Penalties (Jan 1999- Aug 2003) 76.935
Penalties and interest paid (Jan 1999- Aug 2003) 238.465
Debt in 2003 (May) 236.010
Sandra Quintela is a socioeconomist of the Institute of Political
Alternatives for the Southern Cone (Instituto de Políticas
Alternativas para o Cone Sul , or PACS). Translator Greg Downey
is Assistant Professor of Anthropology at the University of
Published in October, 2003, by UNDP (United Nations Development
Program), IPEA (Institute of Applied Economic Research), and
the João Pinheiro Foundation
Take for example, the case of Banestado: US$ 30 billion left
the country legally, being illegal money. Mechanisms like
the CC5 permit a Brazilian company that has a subsidiary in
a fiscal paradise to remit money freely
Proposals are excerpted from the summary of activities held
during the FSM 2003 (Jubilee Campaign South/Brazil, Jubilee
Campaign South of Asia, Africa, and other countries of Latin
America and the Caribbean, and the Committee for the Annulment
of the Foreign Debt of the Third World - CADTM)