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Government Reforms in Brazil - Essay Example

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When Luiz Ignacio Lula da Silva took over as president of Brazil in 2003, the Brazilian economy was in a grievous depression. The new government inherited from its predecessor a mountain of foreign debt, dwindling foreign exchange reserves, an unwieldy fiscal deficit, a rampaging inflation rate and a reals that was fast weakening because of an unplanned 50 per cent currency devaluation…
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Government Reforms in Brazil

Download file to see previous pages... Again Brazil is not alone in this condition. Most countries in Latin and South America that were once ran by the military have abandoned this system in favor of democracy, the same way countries in Eastern Europe that were once part of the Communist Bloc are now embracing the democratic way of life as the better path to progress and peace. For these countries, there is greater pressure to institute these democratic reforms.
The reform agenda enunciated by the Da Silva government in 2002 sought to tinker with the Constitution by amending its provisions on public administration, taxation, social security and ownership of energy and communications facilities. Da Silva's predecessor pushed these very same reforms but succeeded only in introducing new procedures in public administration. These reforms were also implemented on an ad hoc basis unaccompanied by meaningful structural changes. (Bresser-Pereira, L., 2003)
Civil service reforms were placed high on the list because Brazil is known for its inefficient bureaucracy. Even progressive countries like UK and those in the OECD bloc are streamlining their bureaucracy in the increasing realization that structural inefficiencies in public administration are one of the main causes of the fiscal crisis and the budget deficit. (MARE-Brazil)

The bureaucratic reforms pursued in Brazil were thus patterned after the UK model that is also popular in other OECD countries. Its main features call for the decentralization of government functions and services, providing more autonomy, more public accountability and separating policy formulation from execution. Part of the reforms was getting government out of business. This is the same policy carried out in UK, which has already privatized most public utilities. Brazil also turned over to non-government organizations the ownership and management of social and scientific activities. For example, 12 previously state-run hospitals in Sao Paulo are now in the hands of NGOs. (Bresser-Pereira, L., 1999)

Another phase of the bureaucratic reforms serves to democratize entry to government employment by eliminating the policy that sets a single labor standard for civil servants. The government also put a cap on the salaries of employees in the judicial and legislative branches and adopted the total quality management approach to managerial activities in government service. (CLAD, 1998)

Business and Tax Reforms

Tax reform is high on the political agenda as part of the effort to encourage the informal business sector to go formal to increase the government's tax collection. The informal economy in Brazil is so large it is not limited to small and medium scale enterprises but extends to large concerns in the retail and construction industries. In the process, the government misses out on taxes that could run into billions of reals. To encourage the informal business sector to formalize their operations, the government uses the carrot and stick approach to persuade the companies concerned to register their businesses. It is emphasized that going formal gives these companies access to financing and technology assistance. (OECD, ...Download file to see next pagesRead More
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