From the Deficit of Targets to the Targets of Deficit : The Fiscal Policy of the Cardoso Administration 1995/2002

This article analyzes the evolution of public accounts in Brazil in the two Fernando Henrique Cardoso presidential terms: 1995-1998 and 1999-2002. Emphasis is given to the fact that in order to understand the dynamic of deficit and public debt the authorities' attitude was as important as were the so called "structural reforms". Thus, the high deficit of the first term (1995-1998) is understood as the result of an expansionary policy, while the adjustment of 1999 is seen as proof of commitment with fiscal austerity and of the need to finance public expenditures properly. This paper also shows data from different items of the fiscal result, highlights the importance of the once-and-for-all revenues for the reduction of imbalance, and calls the attention to the dimension of the several wealth adjustments that increased the net debt/GDP ratio. Two important messages remain: a) the most relevant cause for the fiscal worsening during the first term of president Fernando Henrique Cardoso was the deterioration of the primary result and not the increase of the interest burden; and b) the total primary federal public expenditure grew in real terms in all the eight years with no exceptions of the two terms, at an average rate of 6% per annum, more than twice as much as the average yearly GDP growth rate of 2.4%