Brazil and the Real: A Defense of the Plano Real

Scott Talentino

POLS 4450

Dr. Gamboa

December 13th, 2019

 The Plano Real was an economic plan introduced under Brazilian President Itamar

Franco.(Source) It sought to address Brazil’s economic problems and the failures of Plano

Collor. (source), that was enacted by the previous administration. The early 90’s in Brazil saw

years of skyrocketing inflation with the cruzeiro, the country had only recently emerged from

decades of being governed under a military junta. A new currency, the real, was introduced to

address Brazil’s economic stability and to provide Brazilian citizens with a brighter future than

had been seen with the cruzeiro.

Brazil is unquestionably better off with the real. Brazil was able to emerge from

destabilizing inflation.and was able to see much economic improvement under the

administrations where the Real was put in place. Brazil was able to avoid the inflationary

disasters of other modern day Latin American countries, such as Argentina, precisely because of

the Plano Real.

In this essay I will illustrate precisely how the abandoning the Cruzeiro and adopting the

Real was a net positive for Brazil. The adoption of a floating currency with positive investments

and willing to work with private markets, even under left wing administrations, were steps in the

right direction. This is further supported by the anti-inflationary legislation from the Cardoso era,

such as the anti-inflationary policies of the Central Bank of Brazil.

I plan to analyze different factors under the different Brazilian administration that have

operated with the Real. I plan to divide these administrations into different factors -economic
policy . standard of living and socioeconomic status, and finally education. I will illustrate the

different characteristics of each of those over time since the Collor administration and tie them

into the overall theme of the net positive of the adoption of the Real.

Throughout each of these categories I will analyze how each administration fared, from

President Collor to President Bolsonaro today. I will also illustrate how Brazil has fared better

under the economic systems under the Real than it would have had it remained with the cruzeiro.

Topics such as political party power, foreign policy, electoral systems, corruption, regional

power balances, political philosophies, and the like, may be addressed at times but are ultimately

beyond the scope of this paper.

Economic Policy

When President Fernando Collor de Mello was elected in 1990, he took a more free market

approach to the economy. President Collor proposed a privatizing certain social welfare

programs as well as giving tax breaks to certain unions. 1His administration proposed what is

now called the Plano Collor. This plan focused on privatization, wage frees, spending cuts, and

encouraging free market principles. It had only very limited success as it was not very well

supported by Congress,nor was it given much time to prove its credibility--Collor was

impeached and resigned from office in 1992 before facing trial2after serving a brief two year

term.

1
Maria D’Alva G. Kinzo, ​Brazil The Challenges of the 1990’s​, (London, The Institute of Latin American
Studies, University of London), 91.
2
Peter Flynn, ​Collor, Corruption and Crisis: Time for Reflection​, (Cambridge, Cambridge University
Press,Journal of Latin American Studies, Vol. 25, No. 2, 1993), 351.
 In December of 1990, Collor’s administration created the Programa Nacional de

Desestatizacao, PND, which lasts until today.3 It’s goal is to focus on privatizing companies in

order to further advance the economy.4 Overall, Collor’s economic plans can be seen as having a

goal of financial prudence in an attempt to counter the economic instability in Brazil was facing

in the 1980’s and 1990’s. This is also shadowed by his administration appearing relatively

shortly after the collapse of the Brazilian dictatorship.

When President Collor took office in March 1990, inflation rates were at 37 thousand

percent.5 President Collor attempted to counter this by introducing wage and price freezes to

counter inflation6(source). Collor had mixed success in curbing inflation, but ultimately it was

not enough. When Collor left office, Brazil was no longer facing the thousand percent increases

it had seen in the 1980’s7, Brazil was still seeing 25% inflation increases per month8, which was

certainly less than ideal.This set the stage for Vice President Itamar Franco’s transition into the

Presidential office.

Collor’s brief tenure in power was followed by Itamar Franco. Plano Collor was not a

complete success9 , and failed to address some of the issues in the Brazilian economy. While it

3
Alfred P. Montero, ​State Interests and the New Industrial Policy in Brazil The Privatization of Steel,
I990-I994​ (Cambridge, Cambridge University Press, Journal of Interamerican Studies and World Affairs,
Vol. 40, No. 3, 1998), 27.
4
Ministério da Economia, ​Nota sobre o Programa Nacional de Desestatização​ (Brasília, BNDES - O
banco nacional do desenvolvimento, 2015).
5
Nader Nazmi, ​Inflation and Stabilization: Recent Brazilian Experience in Perspective,​ (Nashville,
College of Business, Tennessee State University, The Journal of Developing Areas, Vol. 29, No. 4, 1995),
497.
6
Ibid, 497.
7
Alan Riding, ​Brazil’s Crippling Inflation​, (New York, The New York Times, May 30, 1987).
8
Fabrício Augusto de Oliveira​,la política económica en el gobierno de collor: estrategias y fracasos en la
lucha antiinflacionaria​ (Mexico City, Facultad de Economía, Universidad Nacional Autónoma de México
(UNAM), Investigación Económica, Vol. 52, No. 203, Sección temática: Brasil hoy, 1993), 159.
9
Fabrício Augusto de Oliveira​,la política económica en el gobierno de collor: estrategias y fracasos en la
lucha antiinflacionaria​ (Mexico City, Facultad de Economía, Universidad Nacional Autónoma de México
(UNAM), Investigación Económica, Vol. 52, No. 203, Sección temática: Brasil hoy, 1993), 159.
did try to enact some possibly beneficial liberalization policies, the administration lacked a well

thought out vision for its economic implementation, and was blindsided by accusations of

corruption and impeachment. It severely undermined the legitimacy of democratic governance

and economic security in a post dictatorship Brazil. In response to the inadequacies and failures

of the Plano Collor to completely ameliorate the economic situation in Brazil, Franco’s

administration proposed the Plano Real.

The Plano Real essentially implemented a plan that replaced the old currency, the

cruzeiro, with the real. In the brief 1993-1994 period the cruzeiro-real was circulated before

being replaced by the real. It established the Unit of Real Value as a necessary step in

implementing the real. Interest rates were raised and government spending was decreased, this

enabled foreign spending to come in that helped replenish financial reserves while also staving

off inflation.10

The Plano Real played into exchange rate stabilization. In this setup, exchange rate plays

the role of a stabilizing force in the exchange of tradable goods and tends to benefit lower

income workers.11 At the same time this turning outward and away from Brazil’s previous

isolationist policies also made the country more susceptible to economic shockwaves on the

international stage, even so, the plan witnessed an economic success and improvement of

fortunes.12 Furthermore, it will also be shown in this paper that while the Plano Real did not

engage so much in social welfare programs and education, it did enable their more successful

implementation.

10
Chana Joffe-Walt, ​How Fake Money Saved Brazil​ , (Washington D.C, NPR Planet Money, 2010).
11
Marcelo Cortes Neri, ​The Second Real​, (Rio de Janeiro, Fundação Getulio Vargas, 2006), 22).
12
Ibid, 20.
 The administrations of Itamar Franco and Henrique Cardoso are inextricably linked, as

their efforts worked in tandem in contributing to the success of the Plano Real. As such, both

administrations will be addressed together in this part of the analysis.

The Franco and Cardoso administrations witnessed a shift in the Brazilian economy, from

the 1950’s Brazil had focused on isolation and industrialization for their economic policy13,

which caused disastrous inflation, debt crises economic recessions and retardations in the 1980’s.

Both Franco and Cardoso administrations sought to change that by opening the Brazilian

economy to trade, capital, and investment.

Cardoso served as Minister of Finance (until he launched his presidential campaign in

1994) during the brief Franco administration when the Plano Real was adopted, and Cardoso was

supported by a substantially wide margin in the 1994.14 This can be seen as an endorsement of

the economic reforms taking place and hope for a change for the better.

Some critics assert that economic growth should have been higher under the Real than

was projected. However, this linked to the main goal of the Plano Real, to combat inflation. The

Plano Real successfully stabilized inflation rates15 in a way that had never been seen under the

Cruzeiro. While the results were not perfect, the economic plan brought about a successful end to

the inflation crisis.

The real issue remaining was the Brazilian government overspending and insufficient tax

collection, leaving a structural deficit. The Plano Real provided a solution to inflation but at the

13
Maria D’Alva Kinzo & James Dunkerley, ​Brazil Since 1985, Economy, Polity and Society​ (London,
Institute of Latin American Studies, 2003), 156).
14
ELEIÇÕES PRESIDENCIAIS – 1994, MemoriaGlobo
http://memoriaglobo.globo.com/programas/jornalismo/coberturas/eleicoes-presidenciais-1994/a-apuracao
-e-o-resultado.htm
15
Alfred P. Montero, ​Brazil Reversal of Fortune​, (Polity Press, Malden Massachusetts, 2014) 29.
same time failed in some aspects to address the economic woes resulting from a structural

deficit and mismanaged government accounts.

When Lula was elected to the Presidency, he won in large part with his appeal to the

working class and the more poverty stricken Northeastern region of Brazil.16 One might have

guessed that Lula would have been tempted to immediately increase spending programs in order

to appease his power base. However, the Plano Real set up during the 1990’s had established a

precedent of fiscal responsibility, symbolically--and literally with the fiscal responsibility laws

passed during the 90’s to make sure the target hit its mark.

One of the major problems facing Brazil when Lula was elected--besides overspending

without raising taxes--was the issue of Social Security (INSS)17. Much like in the United States,

the program had various issues and needed to be reformed. It was slightly reformed but these

programs are still undergoing reforms and adjustments today.18

In addressing some of the economic successes of the Lula era, Antonio Palocci, the

Finance Minister at the time, (and later Chief of Staff for Dilma Rouseff), admitted that “the

gains obtained by Brazil beginning in 2003 were based on advances achieved by previous

governments and which produced, in general terms, important contributions to economic

stability”.19 It can be said that Lula was more of a moderate in his first term. The Lula

16
Jorge Antonio Alves and Wendy Hunter, ​From Right to Left in Brazil's Northeast: Transformation, or
"Politics as Usual"?​, (New York, University of New York, Comparative Politics, 2017), 437-438.
17
João Paulo dos Reis Velloso, “Rio de Janeiro, Fórum Nacional, Instituto Nacional de Altos Estudos,
Introduçao: Novo governo, novas prioridades é crescimento sustentado: os pontos básicos do XV Fórum
Nacional, in Velloso, ed Governo Lula: Novas Prioridades é Desenvolvimento Sustentado,​ Rio de
Janeiro: José Olympio Editora, p 20.
18
Laís Alegretti e Camilla Veras Mota, ​Reforma da Previdência: os 12 principais pontos da proposta do
governo Bolsonaro​, (Brasília and São Paulo, BBC News Brasil, February 20, 2019).
19
Antonio Palocci, ​Sobre Formigas e Cigarras​. (Rio de Janeiro: Objectiva, 2007), 100-101.
administration, somewhat unexpectedly , continued many of the reforms initiated under the

Franco and Cardoso administrations.

Addressing the 2008-2008 crisis when Lula was still in office, it must be illustrated that

the real value of a minimum wage in reais was able to maintain its buying power, whereas in the

1982 recession under the Cruzeiro buying power fell by 8.2%.20 Herein one can see the Real

serving as one of the economic buffers during a time of crisis. Brazil was also able to recover

relatively quickly and even entered into a relative boom and boost in consumerism which Lula

himself addressed in 2010.21

That being said, many on the far Left felt they had been betrayed by Lula when he took

more moderate policies and even adopted some measures that were more austere than those

proposed by Cardoso-source, Lula’s Brazil. The Workers’ Party was still influential, but over

time Lula put less recognized figures that he could more easily control and influence for political

and economic reasons, the most obvious of these appointments being his protege, Dilma

Rousseff.

Dilma continued many of the policies of the Lula administration. Trade with fellow BRIC

country China grew by 4,000 percent.22Nevertheless, in 2014 Brazil fell into a horrendous

recession, exacerbated by slow Chinese growth, the economy shrank by 7 percent and did not

recover until 2017, and government deficit remained over 7% of the GDP until 2018.

When Michel Temer came into the Brazilian Presidency, following the removal of

President Dilma after an impeachment trial,Temer focused on more traditional, free market

20
Marcio Pochmann,​ O trabalho na crise econômica no Brasil: primeiros sinais​, (São Paulo, Instituto de
Estudos Avançados da Universidade de São Paulo, 2009), 51.
21
Lula da Silva, “Pronunciamento em cadeia de rádio e televisão, sobre as eleições, 2010” Brasília.
22
Andrew Chatzky, ​Brazil’s Economy Under Bolsonaro, (​ New York, Council on Foreign Relations
November 7, 2018).
ideals. Some of the major goals were as follows: Freezing of primary expenditures, including

health and education, for 20 years (Constitutional Amendment 95, approved in December 2016);

Early repayment of loans to the BNDES, which contributed to an 84% contraction in the bank’s

credit supply; Labor reform and reducing union power, limiting public investments with

decreases in financing and correction of budget revenues, and social security reform.

Privatization, including plans for Petrobras and Eletrobras, as well as price policies for aligning

the prices of fuel with international prices.23

Overall, President Temer’s plan had only limited success, due to his widespread

unpopularity, stiff opposition from the left, and a short two year term in office. Temer also had

very limited political support and was neither popular in Northern or Southern Brazil, which was

further damaging to his administration’s goals.24

Due to the brevity of his term, and the still relatively recent presence of President

Bolsonaro, this paper will tie both administrations into an analysis into the current state of the

Brazilian economy.

Current economic indicators show that the Brazilian economy is at a current .10%

inflation rate per month25 and inflation has exhibited a downward trend since 2015.26 This

ostensibly infinitely better than the 80% monthly inflation that was seen in Brazil under the

Collor years27. On the exchange rate one us dollar is currently about 4 Reais.28Bolsonaro’s

23
Aloizio Mercadante and Marcelo Zero, ​A more unequal, excluding
Brazil and of a few,​ (Buenos Aires, Latin American Council of Social Sciences, 2018), 97.
24
Anthony Boadle, ​ Temer's failure on Brazil pension reform leaves tricky task to successor,​ (London,
Reuters, February 20, 2018).
25
Banco Central do Brasil, ​PCA - Inflation rate and Inflation target​, 2019.
26
Ibid.
27
Ben Ross Schneider, ​Brazil Under Collor, Anatomy of a Crisis,​ (Durham, North Carolina, Duke
University Press, 1991), 321.
28
Data provided by Morningstar for Currency and Coinbase for Cryptocurrency.
economic vision can partially be seen by way of his Minister of Economy, Paulo Guedes.

Guedes has previously outlined the following plan: pension reform, privatization, tax Cuts,

bilateral trade deals outside of MERCOSUR.29 That being said, Bolsonaro did object to

privatizing some of the larger state-owned companies partially due to fear of foreign control.30

Bolsonaro was and is beloved by free market economists and business interests on the

international stage. While some might claim that Bolsonaro was betrayed by President Trump

due to recent tariffs on steel and aluminium from Brazil and Argentina31, yet Brazil’s economy is

expanding at its fastest past in three quarters32, much faster than the slow economic “recovery” of

201733 and lackluster performance under the Temer administration34. Furthermore, stock shares

have more than quintupled in the past year along with the most sales seen on the stock market

since 200735, this bodes well for the future of the economy. It also shows more faith in the real

and the Brazilian economy than other countries in South American that are currently in different

forms of crisis.

Standard of Living- Poverty-Socioeconomic Status

Towards the end of Itamar Franco’s administration and the beginning of Henrique

Cardoso’s administration, poverty had decreased by over 18% in Brazil after the implementation

29
Andrew Chatzky, ​Brazil’s Economy Under Bolsonaro,​ (New York, Council on Foreign Relations,
November 7, 2018).
30
Ibid.
31
Amrith Ramkumar, Josh Zumbrun, Paulo Trevisani,​ Trump to Levy Tariffs on Brazil, Argentina,​ (New
York, The Wall Street Journal, December 2, 2019).
32
Jeffrey T. Lewis, Paulo Trevisani, ​Brazil’s Economy Expands at Fastest Pace in Six Quarters
33
Wendy Hunter, Timothy J. Power, ​Bolsonaro and Brazil's Illiberal Backlash,​ (Baltimore, Johns Hopkins
University Press, January 2019), 72.
34
Anthony Boadle, ​Temer's failure on Brazil pension reform leaves tricky task to successor,​ (London,
Reuters, February 20, 2018).
35
Jeffrey T. Lewis, ​Investors Tune Out Discord to Embrace Brazil’s Economic Turnaround​, (New York,
Wall Street Journal, December 3, 2019).
of the Plano Real.36 Such economic success in the fight against poverty was unprecedented in

Brazilian history.

President Henrique Cardoso took some interesting approach, in his own words he said,

“Free-market capitalism has proven itself to be the best system for creating a society that was

more wealthy, prosperous, and fair in the long term. A more healthy economy, in tandem with

more effective policing and a better judicial system, would also help combat the scourge of

crime”37. Therein one may say the vision that guided President Cardoso throughout his tenure in

office.

On the technological side of things, under the Cardoso administration, the public

telephone company Telebras was sold on the Rio stock exchange and privatized, although there

were protests and complaints from individuals, in the long run Brazil went from 800,000 people

with a phone to 81 million by the end of the Cardoso administration38. An increased emphasis on

privatization and loyalty to the Plano Real had encouraged a more economically stable period

that had been seen previously. Tens of millions of Brazilians who had limited access to

communication and technology now had access.Furthermore, by 1999, the percent of Brazilians

living below the poverty line had fallen to 34.1%, it had been 43.8% in 1990.39

If Lula’s administration had a theme, it could be summed up in one phrase: social

welfare. Over the course of the Lula administration, about 70% of the administrations “social”

spending, was geared towards welfare programs.40 This increased Lula’s popularity in generally

36
Marcelo Cortes Neri, ​The Second Real,​ (Rio de Janeiro, Fundação Getúlio Vargas, 2006), 3.
37
Fernando Henrique Cardoso & Brian Winter,​ The Accidental President of Brazil,​ (New York,
PublicAffairs, 2006), 231.
38
Ibid, 233.
39
Maria D’Alva Kinzo & James Dunkerley, 123.
40
Christiane Ströh, ​Apostando na Continuidade? O Eleitor Brasileiro ante os Dilemas do Governo Lula​,
(Mexico City, Universidad Iberoamericana, 2006), 191.
neglected and more impoverished regions, such as the Northeast, and did lead to an increase in

the administration of social programs. However, it also lead to a shortsightedness in areas such

as education that will be discussed later in the paper.

One of the major problems facing Brazil when Lula was elected--besides overspending

without raising taxes--was the issue of Social Security (INSS).41 Much like in the United States,

the program had various issues and needed to be reformed. It was in large part responsible for

Brazil’s structural deficit. Under Lula there was a change in Social Security rules, with the

minimum age for retirement for women going up to 55 and 60 for men, in an attempt to balance

stabilizing the economy with social welfare.42

When Lula was elected, he stated that his goal was for every Brazilian to be to eat three

times a day, source, and with the Workers’ Party, in junction with the Citizens Institute, created

The Zero Hunger Project: A Proposal for a Food Security Policy for Brazil.43 Although in many

ways the campaign against hunger was disorganized and overly bureaucratic, statistics show that

in Brazil that children less than one year old that were malnourished went from 7.8 percent to 1.6

percent, in the years spanning 1998 to 2007.7844 The Plano Real and the viability of the currency

and economic stability enabled such successes in government programs.

41
João Paulo dos Reis Velloso, “Rio de Janeiro, Fórum Nacional, Instituto Nacional de Altos Estudos,
Introduçao: Novo governo, novas prioridades é crescimento sustentado: os pontos básicos do XV Fórum
Nacional, in Velloso, ed Governo Lula: Novas Prioridades é Desenvolvimento Sustentado,​ Rio de
Janeiro: José Olympio Editora, p 20.
42
Kennedy Alencar Julianna Sofia,​ REFORMA DA PREVIDÊNCIA Proposta banca o PL-9, que cria fundo
de pensão para futuros servidores, e desagrada à categoria​, (São Paulo, Folha de São Paulo, APril
2003).
43
José Graziano da Silva, Mauro Eduardo, Grossi Caio Galvão de França, ​The Fome Zero (Zero Hunger)
Program, The Brazilian Experience, (​ Brasilia, Ministry of Agrarian Development, 2011), 13.
44
Maya Takagi, ​A Implementação da Política de Segurança Alimentar e Nutricional no Brasil: seus limites
e desafios,​ doctoral dissertation, Universidade Estadual de Campinas, 2006.
 In a recent statement by Bolsonaro, he promised to expand the Bolsa Familia.45 One can

see a somewhat mixed track record with Bolsonaro in terms of his appeal to the populace on

social welfare. On one hand, it seems that he is targeting funding towards universities, schools,

and families, on the other hand he releases statements assuring that funding for social welfare

programs will be expanded. Time will tell.

Education

President Henrique Cardoso prioritized education for the populace, in a way that had not

been done under the brief Collor and Franco administrations, emphasizing the need for education

in early years.46 In 1996, the Cardoso administration passed National Education Law 9349, also
47
, with a goal to reform all levels of education within Brazil. At the same time, FUNDEF-the

Fund for the Maintenance and Development of Primary Education and Valorization of Teachers,

was established. Source, This system was more decentralized and 60 percent of municipal and

state tax revenues were allotted to FUNDEF. The majority of this went to paying for teachers

will the rest went to paying for infrastructure.48 This program was eventually replaced by the

FUNDEB program, which continues its vision with projections to continue until 2020.49 This

increased funding in education and stability in currency allowed for more social mobility than

had been seen under the inflationary 80’s or the more rigid dictatorship.

45
Agence France Presse, Rio de Janeiro, ​Brazil's Bolsonaro expands left-wing social welfare program,​
(Paris, France 24, November 4th, 2019).
46
Mary Arends-Kuenning, A Report Card For Lula, Brazil Under Lula, (New York, Palgrave MacMillan,
2009 ), 206-210.
47
Presidência da República Casa Civil Subchefia para Assuntos Jurídicos (​http://www.planalto.gov.br
1996).
48
Mary Arends-Kuenning, A Report Card For Lula, Brazil Under Lula, (New York, Palgrave MacMillan,
2009 ), 206-210.
49
Ministério da Educação, FUNDEB, ​http://portal.mec.gov.br/fundeb
 It is important to understand the influence of Cristovam Buarque in both the Cardoso and

Lula administrations. Buarque was one of the main proponents and drivers of the program.50

Eventually the Bolsa Escola was developed, by 2002, the end of the Cardoso

administration the vast majority of Brazilian children aged 7 to 14 were attending school,

according to the World Bank in 1990, most Brazilian adults had only 4 years of schooling.

When Lula came to power the focus was shifted from the Bolsa Escola to the Bolsa

Familia. Little focus was spent on education while the majority was turned to providing human

income transfers, rather than improving human capital.

Lula’s emphasis on education and continuation of the pro-education Cardoso

administration has a mixed record. Lula retained aspects of the Bolsa Escola program, but its

focus was diminished with the far reaching Bolsa Familiar program.

In addition, Lula did show wisdom in his appointment of Cristovam Buarque as Minister

of Education. Buarque showed real initiative and dedication towards improving public education

in Brazil, that being said, he was not met with the same amount of support as he would have

liked. In 2003, the first year of Lula’s administration Buarque proposed 4.3 Billion Reais for the

educational budget, but Lula only asked for 1.3 billion instead.51

Brazil’s GDP fell from 4.7 percent to 4.1 percent under Lula, showing a drop from the

recent Cardoso administration. THat being said, while GDP and funding did decrease under

Lula, the amount of teachers being hired did increase under the Lula administration.

50
Children’s Mission Brazil, Brazilian Cooperation Agency, ​Bolsa-Escola: an education and poverty
reduction program; 100 frequently asked questions,​ (Paris, UNESDOC Digital Library, 2001).
51
Mary Arends-Kuenning, A Report Card for Lula: Progress in Education, Brazil Under Lula (New York,
Palgrave MacMillan, 2009), 210..
 In 2004, according to the Pesquisa Nacional por Amostra de Domicilios (PNAD), about

97.2% of students aged 7 to 14 enrolled in school. This can be seen as remarkable success for

both the Cardoso and Lula administrations, effectively reaching numbers in education that had

never been achieved in the 1980’s or any other era in Brazilian history52.

That being said, during Lula’s second administrative term, more emphasis was placed on

education, raising the budget from 2 Billion in the first year, to 4.5 Billion in the 4th year of his

term.53 Yet at the same time, the successes in education did not match the Cardoso years.

Overall it seems that the Lula administration lost an opportunity to really accelerate the

gains in education made under the Cardoso administration. Lula’s administration focused more

on innovating social welfare programs such as Bolsa Familia to combat social inequality and

woes than it did on truly improving Brazil’s public education. This can lead to a populace that

does not invest as one would hope, and continue Brazil’s trend of dependence on foreign capital

and lack of prudent economic investment.

That being said, Lula did support various Affirmative Action programs during his tenure

as President of Brazil. In 2004 the University of Brasilia announced it would reserve spaces for

black students.54 Other such policies have been implemented in other Brazilian universities since.

Under the Dilma administration, starting in 2011 a significant drop in education was noted by the

World Bank.55 The previous emphasis shown for a more focused educational program under

52
Mary Arends-Kuenning, A Report Card for Lula: Progress in Education, Brazil Under Lula (New York,
Palgrave MacMillan, 2009), 211.
53
Arends-Kuenning, Mary, 216.
54
Lília G. M. Tavolaro, ​Affirmative Action in Contemporary Brazil: Two Institutional Discourses on Race​,
(Berlin, Springer, International Journal of Politics, Culture, and Society, 2008), 145.
55
The World Bank, ​School Enrollment Primary Gross %​, 2019.
Cardoso seemed to be missing, However those numbers did go on a positive rebound in 2015

towards the end of the Dilma administration.56

With the Temer administration the numbers for education increased slightly.57 That being

said, Brazil has still not seen levels of high percentages for enrollment in primary education since

the Cardoso administration.58 President Bolsonaro has recently expressed the desire to make

significant cuts in funding towards public education, citing examples of sexual discussions and

the “Gay Kit” (slang used by conservative detractors towards Brazil’s ​Schools Without

​ rogram, widely introduced in 2011), as well more left-wing ideology deemed

Homophobia P

inappropriate for the classroom and not to be funded by the government.59 This political tension

between the evangelicas and the Right against the Left and secularists, and issues with public

funding can and will create possible difficulties in the future.

A viable alternative to cutting funding would be to propose a curriculum more palatable

to both sides of the aisle for the education of children in public schools. Unfortunately with the

current political division in Brazil, such a project might be extremely difficult to pass or even put

on the table. Even with such difficulties, however, the stability of the real enables access to

scholastic materials and education more accessible than would be under uncontrolled inflation.

The currency serves as a buffer even during unexpected cuts.

Conclusion

56
Ibid.
57
Ibid.
58
Ibid.
59
Vanessa Leite, ​ “Em defesa das crianças e da família”: Refletindo sobre discursos acionados por
atores
religiosos “conservadores” em controvérsias públicas envolvendo gênero e sexualidade​, (Rio de Janeiro,
Centro Latino-Americano em Sexualidade e Direitos Humanos – CLAM, 2019), 122-125.
Overall, the Plano Real adopted in the years of Presidents Franco and Cardoso successfully

addressed Brazil’s inflationary crisis. While other problems did and still do plague the Brazilian

economy, such as a problematic structural deficit, external economic depressions,

overdependence on foreign capital, and corruption, among other factors, Brazil has never again

seen the skyrocketing inflation of the 1980’s.

The stability of the real enabled the Brazilian government to more efficiently reforms for

education as well as social welfare programs. The drawbacks of these reforms come from

bureaucratic disorganization, corruption, and a less than perfectly designed annual budget.

However, the stability of the real, compared to the cruzeiro, was able to mact these reform efforts

more effective than they would have been otherwise. The Plano Real was able to create a better

economy for Brazil that eventually came to fruition in the 2000’s. which the Lula administration

profited off of. This can be seen largely as the result of efforts from the Cardoso and Franco

administrations, combined with the willingness of Lula to be more moderate in his first term,

even while he was accused of betraying his left wing power base60, this middle of the road

approach enabled the success of the Plano Real to truly reveal itself. Another factor in its success

has been the refusal of the Brazilian government to return to the old practice of simply printing

more money to pay for debts.

Hyperinflation was successfully combated, and beneficiary laws and reforms were passed

in the 1990’s that have beneficial effects lasting until today.61 The introduction of the real,

combined with Brazil’s Central Bank’s anti-inflationary policies, have been some of the best

60
Heloisa Helena, “Pronunciamento de Heloisa Helena na Reunião do Dório Nacional,” 14 December
2003, Luciana Genro & Roberto Robaina, A Falencio do PT: é a Atualidade da Luta Socialista, Porto
Alegre: L&PM Editores, 151.
61
Alfred P. Montero,​ Brazil Reversal of Fortune​ (Malden, Massachusetts, Polity Press 2014), 51.
economic policies to take place in the new Brazilian Republic. Compared with the terrifying

inflation of the 80’s, and even the current destabilizing inflation of Argentina62 next door to

Brazil, one is able to more clearly see the economic success of Brazil.

Even with all of the other difficulties addressing the economy, the Real and

anti-inflationary governance successfully provided and still provide a safety net during economic

crises and serve as a model on the international stage in 2019. Over time the real enabled the

implementation of social welfare programs, educational programs, and the reduction of poverty

by large margins in Brazilian society.

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