Lula will seek to find a balance between his ambitious social spending program and the constraints placed on the government by Brazil's huge external debt. As he began his term as president, he faced the challenge of responding to the concerns of international lending institutions over potential inflation resulting from increased government spending. Lula spent his transition period and the first few weeks of his presidency reassuring the financial sector. He vowed to maintain a strict limit on government spending and to avoid a budget deficit. When appointing his cabinet ministers, he sought to send a strong signal to the world that his government would not abandon the strict economic policies of his predecessor.
He also made cabinet appointments aimed at delivering on some of his campaign pledges. Lula, having experienced hunger firsthand as a child, is committed to using his four years in power to eradicate hunger from Brazil. Lula's vocal and emotional stand on the issues of hunger and poverty have brought those two issues to the forefront of Brazilian politics. Although many within his Workers' Party are correctly perceived as intransigent leftists, early on Lula has shown that he is a remarkably skillful politician who understands that building consensus is a central component of a president's mission.
Shortly after being inaugurated, Lula traveled to Davos, Switzerland, to explain his economic plan to the financial, political, and social leaders of the world. Yet, before traveling to the World Economic Forum in Davos, he made a stop to address the 75,000 attendees at the alternative annual antiglobalization world forum, the World Social Forum, in Porto Alegre in southern Brazil. Lula was the only world leader to attend both forums. He explained that as president of a country full of poverty and marginalized communities but fully immersed in the world, he needs to enlist all those concerned with economic growth and the creation of wealth to transform Brazil into a land of opportunity for all.
Lula will also have to deal with Brazil's growing crime rates and Brazilians' widespread mistrust of political and social institutions. He is probably the least-educated president in Brazil's history, and he entered office in an era when the country faces some of its greatest domestic challenges. In the first months of his presidency, he demonstrated remarkable ability to build coalitions and construct consensus behind his policy proposals. If he can continue on that route, Brazil will likely be a more stable country at the end of the four years of Lula's first term as president.