By MICHAEL ASTOR, Associated Press Writer
RIO DE JANEIRO, Brazil - The United States is confident that Brazil's new leftist president won't veer from the path of austerity and free-market policies, a senior U.S. Treasury official said Friday.
U.S. Deputy Secretary of the Treasury Kenneth W. Dam said he was reassured by pledges from a top member of the leftist Workers Party that Brazil will honor all its commitments, including a $30 billion loan agreement with the International Monetary Fund (news - web sites).
"You just heard a prominent representative of the incoming party express his views that fiscal responsibility in Brazil is a priority," Dam said. "On the basis of that we don't have any particular worries."
Dam spoke at the close of the Latin America Business Summit, organized by the World Economic Forum (news - web sites). For three days, some 400 delegates from 30 countries discussed the continent's problems and possible solutions.
Sharing center stage with Dam at Friday's session was Aloizio Mercadante, a top adviser to President-elect Luiz Inacio Lula da Silva and widely considered a top candidate for finance minister when Silva takes office Jan. 1.
"We will honor all our commitments, including the accord with IMF," Mercadante said. "We will look for new ways and will criticize the fund's recessive monetary polices, but we will honor our commitments."
Brazil agreed to targets for inflation and a budget surplus next year, when most of the money will be released. Silva has promised to meet those targets.
A former union boss, Silva was the landslide winner of Brazil's presidential election in October. Investors were alarmed by the prospect of a leftist in command of the continent's largest economy, and credit dried up as Silva's victory appeared imminent. Brazil's currency plunged as much as 40 percent and stock markets hit a three-year low.
"We have three priorities over the short term: Credit, credit and credit," Mercadante said.
In a message to Dam, Mercadante said the United States could do more to help restore credit for Brazil. He said nothing justified the decision by most private banks to cut credit lines for Brazilian (news - web sites) exports, adding that even during Brazil's debt crisis of the 1980s that did not happen.
"We are doing and will continue to do our part, but the Fed can pick up the telephone and help stimulate this confidence and I am certain this will happen much more quickly," Mercadante said to applause from the audience.
Also under discussion was the proposed Free Trade Area of the Americas, a free trade zone stretching from Alaska to Argentina that the United States wants in place by 2005.
Dam said he saw no reason why the deadline wouldn't be met. But the Workers Party wants to slow down the timetable, citing U.S. trade barriers for Brazilian steel and agriculture exports as an example of problems to be resolved.
"The rules for trade disputes today are the rules of rich countries. We are obliged to play baseball, but what we know how to play is soccer," Mercadante said. "But our people are creative and will learn to play your sport."
The forum, best known for the annual conference it holds in Davos, Switzerland, is a private organization that stages economic summits around the world to promote an exchange of ideas between governments and the private sector.