Brazil Since The Re-democratization And 1998 Constitution. Instability Or Learning Curve?

• Published date: 17 August 2020
• Subject Matter: Finance and Banking, Government, Public Sector, Criminal Law, Debt Capital Markets, Financial Services, Inward/ Foreign Investment, Constitutional & Administrative Law, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: PFM Associados
• Author: PFM Associados

In continuation of our series of articles addressing our recent political/economical history, as well as the challenges that lie ahead of us, please find below some information on our country since the re-democratization (1985) and enactment of our current Constitution (1988).

A few facts of our history

• Brazilian Constitution was enacted in 1988;
• It followed an indirect presidential election in 1985, in which the president-elect (Tancredo Neves) died before taking the office;
• The vice-president elect (José Sarney) took the office with no intervention from military forces, which have ruled the country in a dictatorship that began in 1964 (21 years);
• The first free presidential election since the 60's was held in 1989 and a politician from a small state won it with a right-wing speech;
• He was impeached two years after taking office as a result of corruption scandals;
• At that time, Brazil had one of the highest ever inflations of world history and all the economic plans implemented by these two administrations did not result in success, but actually the opposite;
• Brazil was an international debtor, with a moratoria record in the 80's, with the foreign debt only beginning to be actually negotiated in the early 90's

And what happened in the last three decades?

Based on the facts above, imagine someone in 1988. Looking to the future, would he/she imagine that:

• A new economic plan/currency (Real) was successfully introduced in 1994 and inflation since then has been 7% p.y. on average;
• Just as a comparison, between 1939 and 2013 the accumulated inflation was of staggering 3.899.556.304.251.250% (an average of 94% p.y.);]
• From a political perspective, Brazil would be enjoying its longest democratic period since we became a republic in 1889. In numbers, 8 consecutive free presidential elections have been held since 1989;
• Five presidents were elected (Collor, FHC, Lula, Dilma and Bolsonaro);
• Two of them were impeached: Collor, in his first mandate, as a result of corruption scandals, and Dilma, in her second mandate due to illegal acts in connection with our Fiscal Responsibility legislation, which regulates the federation budget;
• Both impeachments involved the Supreme Court and the Congress;
• Brazil would be the stage of the world's largest ever corruption fighting task force, with billions of dollars that were deviated being recovered and a high number of tycoons and high profilers been sent to jail, something that one could agree is not common in Latin...