The Collor Plan ( Portuguese : Plano Collor ), is the name given to a collection of economic reforms and inflation-stabilization plans carried out in Brazil during the presidency of Fernando Collor de Mello , between 1990 and 1992. The plan was officially called New Brazil Plan (Portuguese: Plano Brasil Novo ), but it became closely associated with Collor himself, and "Plano Collor" became its de facto name.
53-520: The Collor plan combined fiscal and trade liberalization with radical inflation stabilization measures. The main inflation stabilization was coupled with an industrial and foreign trade reform program, the Industrial and Foreign Trade Policy (Portuguese: Política Industrial e de Comércio Exterior ), better known as PICE , and a privatization program dubbed the "National Privatization Program" (Portuguese: Programa Nacional de Desestatização ), better known as
106-619: A best-seller, perhaps because, according to a review, "It says little about tax reform and inflation, but a lot about Cardoso's sexual exploits in office." In 1995 she moved to New York City and became a visiting scholar at the Institute of Latin America and Iberian Studies at Columbia University . Since 1998, Cardoso de Mello has served executive positions at several major financial advisory companies focused on Brazil, including Global Access Investments, Orix and Lily Pond Capital. Her academic career
159-429: A lawyer". Roberto Campos , economist, ex-senator and Minister of Planning of Brazil in the early years of the military dictatorship noted that "The OAB has achieved the feat of being mentioned three times in what he defines as the "besteirol Constitution" of 1988. According to him, "it's perhaps the only case in the world where a club of professionals has enshrined the constitutional text." The Constitution of Brazil
212-476: A new freezing of prices and the replacement of the overnight rate with new financial instruments which included in its yield calculation the anticipated rates of both private and federal papers. The plan managed to produce only a short-term drop in inflation, and it began to climb again in May 1991. On May 10, 1991, Zélia was replaced as finance minister by Marcílio Marques Moreira, a Georgetown -educated economist who
265-546: A reserved percentage of jobs in public service and large companies, and Afro-Brazilians to seek reparation for racism in court. Breaking with the authoritarian logic of the previous Constitution, it made unbailable crimes those of torture and of actions directed against the democratic state and the constitutional order , thus creating constitutional devices to block coups d'état of any kind. The Constitution also established many forms of direct popular participation besides regular voting, such as plebiscite, referendum and
318-607: A slow judicial system. Brazil has the 30th slowest judiciary among 133 countries, according to the World Bank . This has caused the judiciary to use provisional arrests as an advance of the sentence. In 2015 more than 40% of prisoners in Brazil were provisional. A World Bank study criticized the 1988 Federal Constitution for extending the privileges of civil servants, aggravating income inequality in Brazil. Remuneration and retirement are disproportionately high according to studies. In 2015,
371-545: A strong reduction in trade and output of industry. With the reduction in the money supply from 30% to 9% of GDP , the rate of inflation dropped from 81% in March to 9% in June. The government faced two choices: they could either hold the freeze, and risk a recession brought about by the reduction of economic activity, or re-monetize the economy by "unfreezing" money flow and risk the return of inflation. Rapid, uncontrolled re-monetization of
424-500: A time of rapid price increases and risk of hyperinflation during the second half of 1989. The proposal to block liquidity originated in academic debate and was imposed upon the main presidential candidacies." In 1990, Cardoso de Mello had an affair with the Minister of Justice Bernardo Cabral , which was revealed when the couple danced cheek to cheek to Bésame Mucho during a birthday party held for Zélia. A married father of three, Cabral
477-534: Is composed of nine titles, subsequently divided into chapters and then articles. The articles are in turn divided into short clauses called incisos (indicated by Roman numerals ) and parágrafos (indicated by numbers followed by §). The Constitution refers to the country as "the Union". The preamble to the Federal Constitution is a brief introductory statement that sets out the guiding purpose and principles of
530-516: Is criticized by some. Some criticize an alleged excessive power granted to the Order of Attorneys of Brazil by the Constitution. Brazilian philosopher and journalist Hélio Schwartsman considers that the 1988 Constitution conferred "disproportionate powers" on lawyers such as "appointing judges, writing laws, proposing direct actions of unconstitutionality, defining who can and who cannot become
583-478: The 1988 Brazilian Constitution which prevented the size reduction as announced at the start of the plan. This vindicated economists such as Luiz Carlos Bresser-Pereira and Mário Henrique Simonsen , both former finance ministers, who had predicted at the start of the plan that the government's fiscal situation would make it impossible for the plan to work. The second Collor Plan took place in January 1991. It included
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#1732855680038636-742: The Executive , the Legislative and the Judiciary , and lists the nation's main goals. One of the most important excerpts from this title is in Article 1, single paragraph, stating: All power emanates from the People, who exercise it through elected representatives or directly, under this Constitution. Title 2 states the Fundamental Safeguards. It ensures basic rights to all citizens and foreigners residing in
689-509: The New Republic (Nova República). Made in the light of the Brazilian transition to democracy , it resignified the role of the state in the citizens' lives, providing a vast system of human and individual rights protection, social welfare, and democratic tools. The 1988 Brazilian Constitution is the seventh enacted since the country's independence in 1822, and the sixth since the proclamation of
742-643: The PND . The plan's economic theory had previously been laid out by economists Zelia Cardoso de Mello , Antônio Kandir , Álvaro Zini and Fábio Giambiagi . The actual plan to be implemented was written by Antônio Kandir and economists Ibrahim Eris, Venilton Tadini, Luís Otávio da Motta Veiga, Eduardo Teixeira and João Maia. The plan was announced on March 16, 1990, one day after Collor's inauguration. Its intended policies included: Three separate plans to stabilize inflation were carried out during Collor's two years in power. The first two, Collor Plans I and II, were headed by
795-474: The citizens' initiative . Examples of these democratic mechanisms were the 1993 plebiscite concerning the form of government, where the presidential system was confirmed, and the 2005 firearms and ammunition referendum . The mention of God in the preamble of the Constitution (and later on the Brazilian currency) was opposed by most leftists as incompatible with freedom of religion because it does not recognize
848-414: The Brazilian state, in 2017, to have stakes in more than 650 companies, involved in one-third of the national GDP. This model also created restrictions for the performance of foreign companies in several fields with harmful consequences for the country's growth. In the view of some scholars, this economic model favors patrimonialism and corruption . The Constitution is also responsible for creating
901-481: The Country, prohibits capital punishment , defines citizenship requirements , political rights , among other regulations. Title 3 regulates the state organization. It establishes Brasília as the nation's capital, describes the rights and duties of the states, the municipalities, as well rules for the public staff. Title 4 is about the branches of government. It describes the attributes for every government branch, and
954-470: The Federative Republic of Brazil ( Portuguese : Constituição da República Federativa do Brasil ) is the supreme law of Brazil . It is the foundation and source of the legal authority underlying the existence of Brazil and the federal government of Brazil . It replaced the autocratic 1967 constitution capping 21 years of military dictatorship and establishing Brazil's 6th republic, also known as
1007-669: The Marcílio Plan and the beginning of the next "named" plan, the Plano Real , inflation continued to grow, reaching 48% in June 1994. Running along in parallel with the Collor Plan was the PICE, a program which aimed to both raise real wages and promote economic openness and trade liberalization. Selected policies included the gradual reduction of tariffs (with the selective protection of certain key industries), an export financing mechanism through
1060-407: The Marcílio Plan remained at hyperinflationary levels. Marcílio left the finance ministry to his successor, Gustavo Krause , on October 2, 1992. President Fernando Collor de Mello had been impeached by congress four days earlier, on September 28, 1992, over charges of corruption in an influence-peddling scheme, marking the end of his government's attempts at ending hyperinflation. Between the end of
1113-538: The Minister of Finance of Brazil, invited her to join his Economic Advisory Team as Director of the National Treasure Dept. In 1990 Cardoso de Mello was appointed the National Minister of Economy, Finance and Planning of Brazil under president Fernando Collor de Mello . After significant criticism, she resigned this position in May 1991. In 1991, she released a biography, "Zelia, A Passion". It became
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#17328556800381166-488: The PND and slated for privatization. Unlike traditional privatization programs, which sought to finance a government's deficit, the PND had a stated goal of providing the government with the means with which they could purchase back the public debt. Government bonds were used in large quantities as currency to pay for privatized companies. Altogether, some 18 companies worth US$ 4 billion were privatized between 1990 and 1992, mostly in
1219-420: The PND was the first large-scale privatization program in Brazil, generating nearly US$ 4 billion for the government and privatizing 18 different state-owned enterprises. According to Carlos Eduardo Carvalho, from Departamento de Economia da Pontifícia Universidade Católica de São Paulo: "The Collor Plan itself began to be formatted by the president-elects advisors at the end of December 1989, after his victory in
1272-491: The Privileged Forum expired. Also criticized is the requirement of unappealable transit for the execution of the sentence. For Judge Sergio Moro , waiting for the final judgment will contribute to impunity. According to Minister Teori Zavascki after confirming a second sentence, one could no longer speak of the principle of non-culpability, since "the exceptional remedies, for the superimposition courts, do not boast
1325-456: The ability to review facts and evidence". In the electoral aspect, the Constitution adopted the mandatory vote. Among the 15 largest economies in the world, Brazil is the only country in which voting is mandatory. A 2014 survey showed that the mandatory vote is rejected by 61% of Brazilians. Some question whether it is democratic to compel people to vote. The Constitution adopted the social democratic model of State organization, as defined by
1378-605: The columnist for the newspaper O Estado de S. Paulo Luiz Sérgio Henriques . For professor and lawyer Marco Aurélio Marrafon , president of the Brazilian Academy of Constitutional Law, the 1988 Brazilian Magna Carta organized the State according to the Welfare State model, in which it is intended to reconcile "the liberal component of preservation of individual rights and limitation of state power, with direct economic intervention and
1431-536: The creation of a Foreign Trade Bank (similar to the American Ex-Im Bank ), reduction in customs duties, implementation of anti- dumping mechanisms and the use of government-generated demand for high-tech sectors. On paper, the PICE had seemingly contradictory goals: to stimulate the entry of foreign companies while increasing local innovation. Later studies by the Institute of Applied Economic Research (IPEA), an independent government think tank , argued that
1484-546: The document. The text reads: We, the representatives of the Brazilian People, assembled in the National Constituent Assembly to institute a Democratic State for the purpose of ensuring the exercise of social and individual rights, liberty, security, well being, development, equality and justice as supreme values of a fraternal, pluralist and unprejudiced society, based on social harmony and committed, in
1537-402: The economy had been named as the cause the failure of the previous economic stabilization plans in controlling inflation. The Collor government would have to "throttle" the re-monetization in order to keep inflation down. To do so, it could utilize a wide combination of economic tools to affect the speed of re-monetization, such as taxes, exchange rates, money flow, credit and interest rates. For
1590-617: The errand of injunction and the habeas data . It also anticipated the existence of a Consumers' Defence Code (enacted in 1990), of a Children's and Youth Code (1990) and of a new Civil Code (2002). It was the first constitution to demand severe punishment for breaches of civil liberties and rights. Consequently, Brazil later approved a law making the propagation of prejudice against any minority or ethnic group an unbailable crime. This law provided legal remedy against those who spread hate speech or those who do not treat all citizens equally. This second aspect helped disabled people to have
1643-496: The federal government's deficit associated with the retirement of the approximately 1 million government employees was greater than the total registered with 33 million private pensioners. For the World Bank, civil servants are among the richest fifth of the Brazilian population. For Roberto Brant , the Federal Constitution was captured by groups of civil servants in 1988. Philosopher Fernando Schüler maintains that Brazil went against
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1696-587: The finance minister, Zélia Cardoso de Mello . In May 1991, Zélia was replaced by Marcílio Marques Moreira , who carried out a homonymous plan, the Marcílio Plan (Portuguese: Plano Marcílio ). Brazil had suffered through several years of hyperinflation: in 1989, the year before Collor took office, average monthly inflation was 28.94%. The Collor Plan sought to stabilize inflation by "freezing" government liability (such as internal debt) and restricting money flow in order to halt inertial inflation. The freeze caused
1749-423: The government issued more and more exceptions granting liquidity, these were later dubbed little faucets (Portuguese: torneirinhas ). According to Carlos Eduardo Carvalho, from Departamento de Economia da Pontifícia Universidade Católica de São Paulo: The Collor Plan itself began to be formatted by the president-elects advisors at the end of December 1989, after his victory in the runoff election. The final draft
1802-414: The grain in the 1980s: "While the world tried to adjust the State to globalization and modernize public management, Brazil bet on a super bureaucratic state in the 1988 Constitution. We offer rigid stability in the employment for civil servants, we mix careers of State with common careers of the public service, we create the law of biddings, we cast the budgets and we eliminate any space for the meritocracy in
1855-401: The increase of the money flow: Taxes and other government bills issued prior to the freeze could be paid with the old Cruzado, creating a form of "liquidity loophole" which was fully exploited by the private sector. A number of individual exceptions to individual sectors of the economy were opened by the government, such as retirees' savings and "special financing" for the government payroll. As
1908-535: The internal and international spheres, to the peaceful solution of disputes, promulgate, under the protection of God, this Constitution of the Federative Republic of Brazil. Title 1 is devoted to the fundamental principles of the Union. It describes the States , the municipalities and the Federal District as the indissoluble constituents of the Union. It also establishes three independent, harmonic government branches:
1961-551: The next few months after the plan was implemented inflation continued on an upward trend. By January 1991, nine months after the plan began, it had climbed back to 20% a month. The failure of the Plano Collor I in controlling inflation is credited by both Keynesian and monetarist economists to the Collor government's failure to control the re-monetization of the economy. The government had opened several "loopholes" which contributed to
2014-487: The policy seemed to have produced that very contradictory effect: local production saw improvements in quality and productivity in face of foreign competition, but it simultaneously curbed domestic innovation due to unrestricted competition from imported technology. While previous privatizations had been conducted by the government in the 1980s, at time of Collor's inauguration, no large-scale privatization program had been attempted. Sixty-eight different companies were added to
2067-423: The promotion of public policies, in order to redistribute resources and reduce social inequalities." In order to finance the Welfare State, it was necessary to raise the tax burden, which went from 23.4% of GDP in 1988, to 33.6% of GDP in 2005, and to link budget revenues. Thus, the Union reached 93% of mandatory spending in 2017, decreasing the room for maneuver by the government and affecting investments. This option
2120-560: The public area." For jurist Modesto Carvalhosa , only a new "principiological" constitution would end the privileges of the 1988 Constitution. The Federal Constitution of 1988 is also criticized for having adopted one of the broadest Special Forums in the world, which jurists argue encourage corruption. A quarter of the actions with a Privileged Forum take more than ten years to be judged. The Supreme Federal Court takes 1,300 days to judge criminal actions by persons with privileged jurisdiction. Between 2001 and 2017, 200 actions involving
2173-422: The republic in 1889. It was promulgated on 5 October 1988, after a two-year process in which it was written from scratch. The current Constitution of Brazil was drafted as a reaction to the period of military dictatorship , and sought to guarantee individual rights and restrict the state's ability to limit freedom, to punish offences and to regulate individual life. Among the new constitutional guarantees are
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2226-400: The rights of polytheists such as some indigenous peoples or of atheists . The Supreme Federal Court has ruled that this commission of the protection of God was not unconstitutional since the preamble of the constitution is simply an indication of principles that serves as an introduction to the constitutional text and reflects the ideological conceptions of the legislator, falling within
2279-406: The rules for amendments to the Constitution as well. Title 5 regulates the defense of the State and its democratic institutions. It rules the deployment of the armed forces , the national security baselines, and declaration of state of emergency . Title 6 comprises taxation and the nation's budget. It disposes on budget distribution among the Union's components and their competencies, and
2332-433: The runoff election. The final draft was probably strongly influenced by a document discussed by the advisors of PMDB party candidate Ulysses Guimarães, and later by advisors of PT party candidate Luiz Inácio Lula da Silva, during the period between the general election and the runoff. In spite of the differences in their general economic strategies, these competing candidates failed to develop their own stabilization policies at
2385-516: The scope of political ideology and not of the Law. The Federal Constitution of 1988 is criticized in the doctrine for being very extensive, long-winded, and analytical. This characteristic forced the Constitution to be amended several times, in politically costly processes, to adapt to changes in society Another criticism is that the 1988 Federal Constitution reproduces a model of state capitalism , expanding state monopolies and regulations, which allowed
2438-427: The second half of 1989. The proposal to block liquidity originated in academic debate and was imposed upon the main presidential candidacies . Ultimately, the government was unable to reduce spending, reducing its ability to use many of the aforementioned tools. Reasons ranged from an increased share of the federal tax revenue to be shared with the individual states to a "job stability" clause for government employees in
2491-597: The steel, fertilizer and petrochemical sectors. The PND also ended several government monopolies whose possible negative social impact was expected to be countered by the increased competition. This increased competition, resulting from the aforementioned PICE policies, was thought to reduce the chance of the emergence of oligopolies . Zelia Cardoso de Mello Zélia Maria Cardoso de Mello (born September 20, 1953, in São Paulo ) served as Brazil 's Minister of Economy from 1990 to 1991 under Fernando Collor de Mello . She
2544-568: Was at the time of his nomination the Brazilian ambassador to the United States . Marcílio's plan was considered more gradual than its predecessors, utilizing a combination of high interest rates and a restrictive fiscal policy. At the same time, prices were liberalized and, working along with Pedro Malan , a US$ 2 billion loan from the International Monetary Fund secured to shore up internal currency reserves. Inflation rates during
2597-486: Was coupled with an industrial and foreign trade reform program, the Industrial and Foreign Trade Policy (Portuguese: Política Industrial e de Comércio Exterior ), better known as PICE , and a privatization program dubbed the "National Privatization Program" (Portuguese: Programa Nacional de Desestatização ), better known as the PND . The PICE was geared towards opening the Brazilian marketing to foreign competition while simultaneously fostering domestic innovation, whereas
2650-637: Was entirely accomplished in the School of Business and Economics at the University of São Paulo, where she achieved both her college degree and her doctorate, and where served as university professor. She is currently a partner at New York-based Aquila Associates. As minister, Zélia was responsible for the implementation of the Plano Collor , which combined fiscal and trade liberalization with radical inflation stabilization measures. A monetarist inflation stabilization
2703-418: Was forced to resign as a result. At a ceremony few days later, the regimental band of the presidential guard ( Os Dragões da Independência ), introduced Zélia with "Bésame Mucho" instead of the usual military march. Its musical director, Lt. Geraldo Mendonça da Lima, was subsequently given 3 days' detention for insubordination. 1988 Brazilian Constitution Recent elections The Constitution of
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#17328556800382756-433: Was later married to Brazilian comedian Chico Anysio , with whom she has two children, Rodrigo and Victoria. The couple divorced in 1998. Zélia Cardoso de Mello worked in the academic, public and private sectors in Brazil. She graduated from FEA-USP where she also got her PhD degree in economics. She was a professor at the University of São Paulo for almost 20 years. Her political career began in 1986 when Dilson Funaro ,
2809-462: Was probably strongly influenced by a document discussed by the advisors of PMDB party candidate Ulysses Guimarães, and later by advisors of PT party candidate Luiz Inácio Lula da Silva, during the period between the general election and the runoff. In spite of the differences in their general economic strategies, these competing candidates failed to develop their own stabilization policies at a time of rapid price increases and risk of hyperinflation during
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