A fall from grace. How to squander an inheritance—and how easily it could be restoredJun 8th 2013 |From the print edition
ALMOST exactly 20 years ago, in May 1993, Fernando Henrique Cardoso was named as Brazil’s 13th finance minister in as many years, a seemingly hopeless job in a country trapped in hyperinflation, debt and an anachronistic economic statism. Mr Cardoso’s Real Plan swiftly tamed inflation and took him to the presidency. There he laid the foundations for a new Brazil, of stability and liberal economic reform. This success was reinforced by his successor, Luiz Inácio Lula da Silva, a left-wing former union leader, whose government saw 30m Brazilians get out of poverty.The trouble is that in Lula’s second term (2007-10) and especially under his chosen successor, Dilma Rousseff, the formula behind Brazil’s success has been slowly abandoned. The policy secret was simple: inflation targeting by a Central Bank operating with de facto independence; transparent public accounts; a rigorous fiscal target, which brought down the public debt; and a much more open attitude to foreign trade and private investment...
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