Tuesday, President Luis Inácio Lula da Silva made an end of year announcement on national radio and TV. In his speech, he reiterated the robustness of the economy, the Brazilian banking system and emphasized that the country is facing the world economic crisis with its “head held high.”  He guaranteed that Brazil would continue to grow due to the sustainable nature of economic acceleration that has occurred.

The president also cited the strength of the internal market, which brought about the record number of jobs created in the past two years. He assured that the government investments planned in the Accelerated Growth Program (PAC) and social programs would continue.  Furthermore, President Lula announced that in 2009 the exploration of pre-salt petroleum reserves would commence.

Read the announcement:

“My friends,

tonight I want to talk to you about the global economic crisis. This crisis is very different from previous ones. It did not arise in a developing nation or on the periphery of the economic system. On the contrary, it erupted in the heart of the developed world, namely the United States and Europe.

This crisis, which is now affecting the entire world, was caused by a lack of control over the financial system in wealthy countries. Rather than playing their part in the economy by financing the productive sector, the banks became giant casinos.

This gambling was fun for a while, but then the bill arrived. Banks have gone under, many companies are experiencing serious problems and millions of workers have lost their homes and jobs. Here in Brazil we have not had have this type of crisis. Our banking system was and is healthy. Our tidy and organized economy is growing at robust rates, the best in the last 30 years.

So, the crisis coincided with our best moment. The crisis is a shame, but because we are doing well, the situation is less troublesome for us. Everyone agrees that we are one of the most prepared countries to face this challenge.
In previous crises, Brazil would go bust in a matter of days and would be obliged to seek help from the IMF. This time, Brazil did not run out of money, nor will it. Brazil is facing the situation with its head held high.

While the majority of wealthy countries are in recession, Brazil is continuing to grow. It is true that with the wind blowing in our favor, we can go much further. But, even with the wind against us, we can and will keep progressing. If we are in a better position to face any crisis, it is because we made the right choices. It is because we provided a solid base for faster economic growth. And as we grew, we distributed income and reduced inequality among the regions.

In the first place, we kept inflation under control. When I took office as President, inflation was above 9%. Since then, it has been declining year by year. In 2008, even with sky rocketing international prices, it will stay within the target. We also reduced public debt. In 2003, it represented 52% of GDP. It has fallen since and this year should reach 36%.

Besides this, we have diversified our exports. I traveled around the world, promoting our products. Some criticized us. But, today, while the United States and Europe are in the eye of the storm, we can see that the decision to diversify our commercial relationships was right.

My friends,

another advantage is our large reserves of foreign currency. When I took office, Brazil owed a lot to the IMF and the Paris Club. Today, we do not owe a cent. Back then, our foreign currency reserves were very low. Today they have reached USD 207 billion. Because of this, we have gone from being international debtors to creditors. This makes a very significant difference. Now we have a security buffer to protect us.

But our greatest defense today is the power of our domestic market. It has made extraordinary progress over the past few years, boosted by the Bolsa Família welfare program, higher minimum wage and rising levels of employment. Since 2003, the minimum wage has risen 51% in real terms, and employment has also grown strongly.In 2007, we broke a record: 1.812 million new jobs in the official employment market were created. And in 2008, we have broken the record again: as of October, 2.148 million jobs have been created. As a result, the unemployment rate fell from 12.3% in 2003 to 7.6% in October 2008.

Our economic and social development has resulted in more than 20 million people entering the middle class in recent years. All of this has caused the economic wheel to turn much faster, leading to a virtuous circle in our country. The transformation has been dramatic.

My friends,

these advances enable Brazil to face the current situation with firmness and serenity. And we have been acting on all fronts since the crisis began.  We have adopted measures to normalize the credit system, in order to support our exporting companies and to maintain activities in sectors that create most jobs, such as small and medium sized companies, agriculture, construction and the car industry. We have reinforced the firepower of government-owned banks and we have cut taxes to improve companies’ cash flow and put a little more money in consumers’ pockets.

At the same time, the government will maintain all of the investments planned for in the Growth Acceleration Program (PAC) and in social programs.  In no event will there be cuts in government investments. They will be crucial aids to Brazil in getting through the crisis and leaving it stronger.

My friends,

I want to say, in all serenity, that the crisis does not scare us. The country is prepared and in control. We are monitoring the situation with a magnifying glass, 24 hours a day. Whatever has to be done will be done, at the right time and in the right dose, and always in dialog with the country.
But it is fundamental that we all do our part. It is important for businessmen to keep investing. It is essential for workers to defend production and jobs. The financial sector must work to stimulate credit and lower interest rates, which are very high.

And you, my friend, don’t be scared to consume responsibly. If you are in debt, first look to balance your budget. But if you have a little money in your pocket or received your Christmas bonus, and you want to buy a fridge, a stove or trade in your car, then don’t let go of your dream for fear of the future.

Because if you don’t buy, the shops won’t sell. And if a store doesn’t sell, it won’t place new factory orders. And then, the factory will produce less and in the medium term, your job could be at risk.
Therefore, when you and your family buy something, you are not just realizing a dream. You are also helping to keep the economy ticking. And this is good for everyone.

My friends,

I can assure you that Brazil will not only get through this crisis, but it will come out much stronger. We have everything to make this happen. In 2009, we will begin exploring the immense pre-salt deposits. Because of this, Brazil will become one of the world’s great oil producers. We are all in the same boat. And if we paddle together in the same direction, we will overcome the rough waters and continue on the route to growth. It just depends on us.

I wish you and your family a Merry Christmas. May 2009 be even better than 2008. May it be a year of health, peace and prosperity.
Believe in Brazil, because above all else, you’ll be believing in yourself”.