MATTHEW COWLEY
  Associated Press

  SAO PAULO, Brazil - President Luiz Inacio Lula da Silva's election as Brazil's first working class president raised hopes for change, but his first three months in office have been weighed down by financial instability and party infighting.

  Silva was elected on Oct. 27 in a landslide by voters disenchanted by the government of President Fernando Henrique Cardoso, which capped years of high inflation but was only able to promote sluggish economic growth.

  But the day Silva took office Jan. 1 a fierce battle began to persuade the financial markets that his leftist party would not lead the country into chaos.

  That meant extending reforms demanded by the International Monetary Fund that were readily implemented by the previous administration but constantly decried by Silva, a former metal worker who rose to fame organizing strikes against the country's 1964-85 military regime.

  In an effort to win over financial markets, Silva raised interest rates to fight inflation and cut public spending to increase the budget surplus.

  The premium paid to Brazil's debt fell by almost 50 percent while the currency regained lost ground against the dollar.

  Silva also took steps to turn Brazil into a world player, kicking off an unprecedented scheduled of high-level visits with Latin American leaders while making good on promises at home to bring his Cabinet minister face to face with the country's poverty. Silva ushered his Cabinet ministers through shantytowns within weeks of taking office.

  But full recovery of the economy has been delayed as world markets remain sluggish with the war in Iraq.

  Silva's decisions also triggered a crisis within the broad coalition that supported him in the election, including some of the more radical elements within his own Worker's Party.

  Several legislators have criticized the economic policies adopted by the new leftist government as a continuation of the economic policies of the previous government.

  Senior party officials, such as Jose Genoino, a formal guerrilla leader who trained in Cuba in the 1960s and now heads the party, were dispatched to put out the fires but the rumbling continues.

  Sen. Heloisa Helena, addressing a meeting of a moderate wing of the Worker's Party this weekend, said there's no point in criticizing the previous government and "now not change the direction" of economic policy.

  "At a time when the IMF is disqualified around the world, we are legitimizing that institution," Helena said.

  But party members expressed hope last week that things could turn around in their favor despite holding a minority in Congress.

  The first hurdle was cleared last week, as the government ushered a constitutional amendment through Congress that will allow greater autonomy at the Central Bank.

  The party hopes to secure such support again in the future for its tax and pension reforms.

  Despite stirring up a flurry of hopes with his landmark win, Silva has tried to play down the expectations of 52 million voters who elected him last October.

  He reiterated this week that he did not expect to achieve many of his objectives in these four years of office, but said he'd put the foundations in place to build for the future, hinting at his likely re-election campaign in 2006.

  In an interview to be broadcast Monday, just three days before the 100 day anniversary on Thursday, Silva is expected to defend the decisions taken so far, saying they helped avoid economic disaster.