Plano Collor: Difference between revisions
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Inflation actually fell in the very first months of the Plano Collor but, as restrictions on money velocity and supply were lifted, inflation was back by the end of 1990 with full force, reaching 1,198% per year, when the Plano Cruzado II was announced. |
Inflation actually fell in the very first months of the Plano Collor but, as restrictions on money velocity and supply were lifted, inflation was back by the end of 1990 with full force, reaching 1,198% per year, when the Plano Cruzado II was announced. |
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As a result <ref>[http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+br0009)''Library of Congress Country Studies''] {{pt icon}} </ref>, inflation reached 50 percent per month by June 1994 and averaged 31.2 percent a month in 1994, for total of 2,294.0 percent that year. Inherited from ''Plano Collor'', as result of ''Real Plan'' (Fernando Henrique Cardoso, Collor´s successor), inflation declined to monthly rates of between 1 and 3 percent in 1995, for an annual rate of 25.9 percent. In 1996: 16.5 percent; 1997: 7.2 percent. '''By 2006: 3,18% annually'''. <ref>[http://www.agenciabrasil.gov.br/noticias/2006/12/04/materia.2006-12-04.2785518080 Inflação permanece estável e deve fechar 2006 em 3,15%, revela pesquisa]{{pt icon}}</ref>. |
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Revision as of 19:17, 19 August 2007
The Plano Collor (Portuguese: Collor Plan, after the name of the sponsoring president) was officially called Plano Brasil Novo (New Brazil Plan), but the former name gained wide acceptance in the media and became the de facto name for a series of policies and procedures to control inflation in Brazil in 1990, during the presidency of Fernando Collor de Mello.
The Plano Collor was announced on March 15 1990 and had ambitious goals, such as putting the long-lasting economic crisis to an end, bringing balance to the Brazilian economy and "elevating the country from the Third to the First World."
The existing currency, the cruzado novo was replaced by the 1986 cruzeiro and a cap on bank account withdrawals was put in place. All Economic agents (such as individuals and corporations) were not allowed to withdraw more than Cr$ 50,000.00 from any bank account (be checking or investment) for a period of 18 months. This measure intended to meet the monetarist interpretation of inflation, artificially limiting the supply of (actually, the access to) money.
All prices in the economy were "frozen" so that it was unlawful to change prices (e.g., supermarkets were forbidden to change prices on goods, but this proibition extended to wages as well).
A number of new taxes and tariffs were created and there were generalized tax increases for the existing taxes and tariffs.
The economy was gradually open for imports, after decades of isolation from international markets, causing the bankruptcy of many domestic corporations, faced with sudden competition and difficulties to make payments (due to the cap on bank accounts).
Feeling the pressure from corporations, the finance minister Zélia Cardoso de Mello implemented the "Operação Torneirinha" ("Operation Little Tap"), that eased restrictions on bank accounts (the Cr$ 50,000.00 cap), so that corporations could meet their tax, wage and social security payments. Corporate investments were also freed from the restriction, which effectively harmed only individual investors.
Inflation actually fell in the very first months of the Plano Collor but, as restrictions on money velocity and supply were lifted, inflation was back by the end of 1990 with full force, reaching 1,198% per year, when the Plano Cruzado II was announced.
Notas
Plano Cruzado II
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See also
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