Brazil Plano Real + Cardoso stabilisation

Doctrine — stated goals and content

Three-stage stabilisation defeating hyperinflation (IPCA above 2,500% in 1993). Stage 1 — fiscal adjustment via Fundo Social de Emergência (1993). Stage 2 — introduction of the Unidade Real de Valor (URV) from 1 March 1994, a parallel unit of account fully indexed to the dollar, converting prices and contracts from cruzeiro real while leaving currency issuance unchanged. Stage 3 — on 1 July 1994 the URV was converted 1:1 into a new currency, the real (BRL), launched initially at ~1:1 with the USD on a managed crawling band. Exchange-rate-as-anchor regime ran 1994-early 1999 until the January 1999 devaluation forced transition to a floating regime with formal inflation-targeting from June 1999 (initial target 8% +/-2%). Structural reforms: large privatisations 1995-2000 (Telebrás 1998, Vale 1997, Eletropaulo, CSN); Fiscal Responsibility Law 2000 (Lei Complementar 101) binding all levels of government to debt ceilings and primary-surplus rules; 1998 constitutional amendment on social-security indexation. Stated case: end forty years of chronic + hyper-inflation via unit-of-account reform + rule-based macro anchors without the kind of hard peg that had failed in the Southern Cone.