The Scope of Multinational Companies in Brazil

 OMG, with Cardoso as prez, there were so many lit political changes that totally impacted the Brazilian economy. Cardoso had a pretty solid hand at the start of his admin. The Real Plan was hella popular, fam. Unemployment was hella low, and the inflation rate was like less than 1 percent (Roett, 2010:91). Cardoso was like, "Yo, I'm tryna bring in some lit reforms right at the start of my prez term." One of his admin's major goals was to flex on the public sector and yeet out the expensive and low-key whack state companies. Programs of privatization had been introduced by earlier admins, but there had been mad resistance to these efforts. However, like, with the mad success of each privatization, the process gained hella support and under the Cardoso administration, the speed of privatization went through the roof. Between October '91 and December '05, over 120 state enterprises got sold, raking in a cool $87 bil, and $18 bil in debt got passed on to the private sector. This revenue stream totally saved the government from a major fiscal crisis during Cardoso's first term, like for real (Roett, 2010:92).

A change in the economy? That's straight up wild, fam!

Cardoso wanted to flex on the past and level up. The aspects of his program needed some serious changes to the constitution, tbh. The vibe of these moves was to flex on state-held monopolies in crucial sectors and bring in private and foreign competition, ya know? Yo, in the energy game, the gov wanted to let foreign-owned companies flex on oil extraction and they were like, "Yo, let both foreign and Brazilian companies serve up that natural gas to homes and industries, ya feel?" This had been a task reserved for the state-owned oil giant, Petrobras. But like, Petrobras was the OG in charge of this, you know? Also in telecom, the only company that was able to provide phone and data transmission under license from the fed gov was the state-owned Telebras. The new admin was all about flexing competition and modernization by letting both Brazilian and foreign companies do their thing and provide these services (Roett, 2010:92). Another proposed amendment allowed foreign companies to flex in coastal shipping, which was an activity placed off-limits for foreign firms by the constitution. All of these reforms were like, totally passed and it was like, so revolutionary. The Brazilian economy was, like, totally closed and hella protectionist at this time. The Cardoso gov called for a gradual flex, mad competition and fresh investment. They wanted to start flexin' fiscal reform by reorganizing the tax system and reforming social security, ya know? (Roett, 2010:93).

Fiscal Responsibility Law, but make it fiscally lit AF

In 1995, the Cardoso gov decided to flex on the fiscal prob by tryna get approval of a Fiscal Responsibility Law (LRF). This is like, legit one of the most crucial moves by the Cardoso government, you know? The fiscal laxity has been, like, a major weakness in how to govern Brazil for, like, decades. All levels of the state bureaucracy totally went overboard and expected the fed to bail them out for their reckless moves, either by flexing the money printer or dropping some lit public bonds. Both were like major debt vibes and inflation, you know? The LRF was like totally approved in May 2000 and it like totally strengthened fiscal institutions and established a broad framework of fiscal planning, execution and transparency at the federal state, and municipal levels. Lit, right? Presentation of fiscal admin reports every four months, with a lit account of budget execution and compliance with the LRF rules was like totally required by the LRF. The LRF also set ceilings in terms of expenditure, fam. OMG, the guv set a cap on how much $$$ can be spent on personnel, like pensions and paying peeps who do work for the gov. It's like 50% of fed spending and 60% of state and local spending. (Roett, 2010:93) #governmentbudget Yo, they be droppin' mad consequences for public officials who be breakin' the law or doin' shady money moves as stated in the Fiscal Crimes Law (Roett, 2010:94).

OMG, like, when it comes to public debt, the LRF and other laws are all like, "Yo, we gotta keep it under 120% of our current revenue, fam." 

And this applies to both the national and state levels, you know? If this ceiling were like totally breached, the debt would have to be brought back within the ceiling over the following twelve months and like no form of borrowing would be permitted until that happened. There was like this rule that said net borrowing couldn't go over the amount of capital spending. OMG, loans between the national state and municipal governments were totally cancelled. No more of that, fam! Yo, the LRF had like two escape clauses that would totally suspend the application of the debt ceiling, fam. The first escape clause would apply if Congress declares a state of total chaos or a major lockdown situation. The second one would totally apply if we're talking about an economic recession, which is like when the growth rate is less than 1 percent of GDP for a whole year. Yo, when we're dealing with an economic recession, the time to fix a breach in the debt ceiling would be like, doubled up for two whole years. These escape clauses would also apply to the limits on personnel spending (Roett, 2010:94), ya know?