Brazil's Lula calls for end to austerity, return to growth

[SAO PAULO] Former Brazilian President Luiz Inacio Lula da Silva urged a return to pro-growth economic policies like tax breaks and more consumer credit on Monday, doubling down on a strategy that has strained public accounts in recent years.

Mr Lula said during a news conference that he wanted to serve as an advisor to his successor, President Dilma Rousseff, regardless of salary or legal protection in court.

"I am convinced that I can contribute, and it will be possible to change the mood in this country in a few months," he told foreign journalists.

Miss Rousseff is facing impeachment proceedings in Congress and the main partner in her ruling coalition appears set to leave the government.

In an effort to rally allies against impeachment, Miss Rousseff appointed Mr Lula as her cabinet chief this month. That sparked protests and cries of foul play from political opponents, who saw it as an effort to shield him from a graft probe into state-run oil company Petrobras.

Prosecutors say there is evidence that Mr Lula received luxury real estate from contractors implicated in a vast Petrobras bribery scheme. Lula denies any wrongdoing and said on Monday he was not responsible for knowing about corruption at Petrobras when he was president.

A policy institute run by Mr Lula said in a statement that he was "the target of a quasi-judicial witch hunt" and not even formally under investigation.

The federal prosecutors' office in the southern city of Curitiba, which is leading the corruption probe, told Reuters the Supreme Court was deciding if the investigation of Lula would continue in Curitiba or in Brasilia.

Mr Lula also blamed the opposition and national media for leaks of the investigation and for stoking hate during recent anti-government protests. "They're turning Brazil into the same climate as Venezuela,"he said, referring to polarization in Brazil's northern neighbor.

Brazil's economy, which averaged over 4 per cent annual growth during Mr Lula's 2003-2010 presidency, is now on course for its worst two-year downturn in more than a century and ratings agencies have downgraded Brazil's sovereign debt into "junk"territory. They warn that years of fiscal stimulus have put public accounts on an unsustainable path.

Political opponents seeking to impeach Miss Rousseff accuse her of breaking budget rules to boost spending during her 2014 re-election campaign, which she has denied.

Mr Lula said the Workers' Party had lost part of its base during an austerity push and urged a return to the party's roots of empowering the poor and middle class.

"We need to present an economic proposal that can recover the hope of these people," he said. "Stop talking about cuts and start talking about investment."

REUTERS