Instituto Cultural Minerva Institute of Brazilian Issues The George Washington University

First, to point out the changes in the state's role after 1995, the priorities of the Cardoso administration, and the first impact of the stabilization plan. [...] II - The Social Situation at the Beginning of the Real Plan II.1 - General View The Brazilian society lived, between mid 1980s until the beginning of the 1990s the consequences of their capital accumulation pattern initiated in the 1960s. [...] The deepness of fiscal crises at the beginning of the 1990s, begun in the 1980s, led to a progressive exhaustion of the pattern of social management based on both, negotiated transfers and decentralization of responsibilities. [...] Among many explanations for the failure, and considering the government model adopted in the country, one is always described as fundamental: the Constitution of 1988 increased the participation of states and municipalities in the federal budget, weakening the federal base of resources, and the concerns with economic stabilization placed growing limitations on the financial relations among federal. [...] The amount of resources and the selection of borrowers follow criteria defined by the Ministry of Planning and approved by the Council of Severance Fund, the superior level of decision about investments with resources of this Fund.