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Brazil Index
The root of Brazilian inflation has been the monetization of the public sector's fiscal deficit, because deficits that are not financed by borrowing either from abroad or domestically must be covered by the creation of money. By the early 1990s, the old debate between the monetarists (see Glossary), who emphasized the central role of money supply growth in the inflationary process, and the structuralists (see Glossary), who attributed price increases to supply problems in developing economies like Brazil's, was viewed as an obsolete and largely sterile discussion. Instead, debate focused on the causal relationship between inflation and the money supply, and on how much freedom the government actually had in determining money-supply growth.
However important monetization of the public sector's fiscal deficit may have been in the past in either initiating or accelerating inflation, the reinforcement of the inflationary process by past inflation and by expectations of future inflation was an important part of the Brazilian experience in the 1980s and 1990s. In Brazil the feedback effect of past inflation has been institutionalized in an extensive indexation or "monetary correction" (correção monetária
) system, which was developed and extended to most markets between 1964 and 1970. The result was an economy in which apparently modest initial shocks could be transformed into high and continuing inflation. Recognition of this feedback effect in the early 1980s played a role in the design of the 1986 Cruzado Plan, as well as in subsequent stabilization attempts, notably the Real
Plan in 1994. The inflation indexation system, which in the 1970s had been virtually unquestioned, was increasingly blamed for contributing to the continuation and acceleration of inflation in the 1980s and early 1990s.
Although inflation accelerated significantly in the 1980s, it had long been a feature of Brazil's economy. The first major inflationary surge began in the late 1950s and continued until 1964, in part the result of the monetary accommodation of fiscal pressures resulting from a sharp rise in government expenditures. A second surge began in the 1970s, partly as a result of the external shocks caused by the rise in energy prices. The indexation system served as a vehicle for amplifying energy price increases into higher widespread price increases than might have occurred. Inflation worsened dramatically in the 1980s, however, as Brazil lost its access to foreign capital markets and domestic borrowing to finance the growing public-sector deficit became increasingly expensive (see table 15, Appendix). Inevitably, money creation became one of the primary ways to finance the deficit.
It is difficult for non-Brazilians to grasp the significance of double-digit inflation for forty years, with triple- and even quadruple-digit inflation in the 1980s. By the late 1980s, annual rates of inflation were almost meaningless, and Brazilians themselves routinely characterized inflation by its monthly rate, which in the early 1990s was over 35 percent. Between the end of World War II and Brazil's Real
Plan in 1994, the price level had increased more than 100 billion times.
Not only did inflation accelerate over the 1980s, but the rate became more variable and less predictable. The frequency of price adjustments increased, and wage and salary adjustments that had once occurred annually were adjusted semiannually, then quarterly, and in some markets monthly, as inflation accelerated. In other markets, especially the capital markets, inflation had similar effects in shortening contract periods. Few borrowers or lenders would dare to make long-term commitments, and by the late 1980s most Brazilian firms, as well as most wealthier individuals, held any excess assets in short-term, highly liquid deposits that were literally known as the "overnight."
The rise in indexation in Brazil after 1964 had permitted the government to tap the supply of domestic saving by selling indexed government bonds to savers, who were thus protected against the effects of inflation on the value of such assets. Although indexed bonds were regarded as a great success in the 1960s and 1970s, the need to pay not only the interest but also the inflation adjustment became an increasing burden for the government in the 1980s.
Despite the burden that indexed bonds placed on government finances as inflation accelerated, inflation itself appears to have been an important source of revenue for the government. The "inflation tax," which is the real income that the government receives through the issuance of new money, tends to increase with inflation, because nonindexed money or partially indexed financial assets issued by the government lose their real value. This loss in spending power incurred by the holders of money is in effect a tax, because the government spending financed by money creation is paid for by the loss in value of the money held by the public. Attempts have been made to measure the income that the Brazilian government earned through the inflation tax, and some estimates suggest that income from this source in the 1980s was over 3 or 4 percent of GDP.
Data as of April 1997
Despite the popular image of Brazil's public sector as a profligate spender and intense consumer of resources, public expenditures as a share of national product remained relatively stable until the mid-1980s. The containment of public spending under the government of President João Batista de Oliveira Figueiredo (1979-85) at the federal level included limitations on hiring and expenditures on goods and services as well as cuts in public investment. Spending by state and local governments was limited by reductions in the revenues transferred to them by the federal government.
Total spending for public-sector wages and salaries, which had actually declined as a share of national product between the early 1970s and 1984, only began to increase when the government of President José Sarney (1985-90) took over, reaching almost 10 percent of GDP in 1989. Public-sector spending on goods and services as a share of GDP also increased under President Sarney. A fall in net subsidies to the private sector and a stable level of social security spending were not sufficient to offset a sharp rise in government spending on wages and salaries. The expansion of public spending after 1985 occurred at all levels of government. At the federal level, it was partly caused by the efforts of President Sarney to secure a full five-year mandate, reinforced by the misperception that Brazil's budget deficit would be negligible if the effects of inflation on it were discounted. At the state and local levels, greater revenues were available as a result of changes in federal transfers after 1985, a trend reinforced by the 1988 constitution. Much of this spending went for current expenses, primarily personnel, rather than investment in infrastructure. Even with this expansion in state and local spending, however, the federal government remained responsible for about two-thirds of total expenditures. State spending was primarily for education and health, and local government expenditures were devoted principally to housing and urban development. At all levels of government, however, much of this spending, whatever the announced function, was for personnel and administrative costs.
The worsening of Brazil's public-sector finances in the 1980s was in part the consequence of the political and administrative decentralization that took place following the return to civilian rule in 1985. In 1988 the new constitution made this decentralization explicit, transferring to state and local governments a substantial part of the revenues that were formerly received by the federal government. There was not, however, a parallel decentralization of expenditure responsibilities. The federal government retained most of its functional responsibilities, while losing a significant part of its revenues.
Trends in tax revenues after 1983 further aggravated Brazil's public-sector finances. Tax receipts as a share of GDP fell sharply after 1983, having averaged about 25 percent in the preceding decade. With the exception of the atypical year of 1986 (the Cruzado Plan), they did not regain such levels until the first years of the Collor de Mello government, when increases in income taxes and social security contributions, as well as taxes on manufactured goods and financial operations, slowed the decline in revenues.
Although the federal government in the early 1990s made determined efforts to maintain its income by enforcing tax collection, these efforts met with limited success. Public cynicism about the government's use of tax revenues, fed in part by the corruption scandal that forced Collor de Mello from office in September 1992, led to increased tax avoidance and in many cases to outright tax evasion. Although little firm evidence is available to quantify tax evasion, considerable anecdotal and fragmentary evidence suggests that it rose significantly in the 1980s and early 1990s. With the increased financial opening of the economy, many Brazilians sought to shelter income derived from financial assets by placing them outside Brazil, even when before-tax returns in Brazil were substantially higher. Capital flight from Brazil, which had not been as serious a problem as it had been for a number of other Latin American nations in the 1970s and early 1980s, accelerated significantly in the late 1980s. Other ways in which Brazilians evaded taxes included substantial understatement of income from professional and service activities and the widespread practice of making transactions without documentation for tax purposes.
The adoption of the new constitution in 1988 had a significant impact on public-sector finances. Many Brazilians viewed it as the vehicle through which to redress what they regarded as excessive concentration of powers at the federal level. Consequently, strong support existed for decentralizing government and shifting power from the presidency to the Congress. Many Brazilians also saw the new constitution as a way not only to guarantee civil rights but also to secure specific economic rights in the areas of health, education, employment guarantees, and social security.
The result was a document that is far more specific and lengthier than those of most other nations. Some advances were made in the arrangement of public finances, among them restrictions on off-budget spending by the executive and better defined procedures for the preparation and passage of an annual budget. In a larger sense, however, the 1988 constitution made the potential for fiscal deterioration more likely, especially at the federal level. It not only reduced the revenues that went to the federal government by transferring them to states and municipalities but also linked many revenue sources to specific objectives, further restricting the federal government's ability to allocate expenditures. In addition, the new charter actually expanded some federal responsibilities in a number of areas, among them law enforcement, education, and cultural affairs. Another provision granted tenure to public employees after two years. The constitution strengthened employment and pension guarantees and the explicitly maintained pension and retirement rights based on length of service--thirty-five years for men and thirty years for women--without regard to age at retirement. Together, these provisions made fiscal equilibrium, especially at the federal level, even more difficult to attain than it had been before 1988.
A number of Brazilian economists and policy makers soon recognized the budgetary implications of the new constitution. The stabilization program of the new Collor de Mello government in 1990 temporarily halted the decline in federal government revenue through its price and wage freezes, but this was done at a very high cost. The dramatic freezing of most Brazilians' financial wealth under the first Collor de Mello plan raised basic legal and constitutional questions about the fiscal rights and responsibilities of the government. A number of Brazilian legal scholars questioned the right of the government to impose what they argued was a tax, not allowed for in the constitution, through the freezing of assets whose full real value would not be repaid to their holders.
By the early 1990s, a consensus had emerged that successful economic and price stabilization would require profound changes in Brazil's fiscal system and, if necessary, amendments to the 1988 constitution. Although such views were rejected vigorously if suggested by others, such as the IMF or foreign lenders, many Brazilians recognized that the 1988 constitution had created a number of fiscal problems. In October 1991, the Collor de Mello government submitted to Congress a series of proposals aimed at reducing the fiscal pressures at the federal level. Among the proposed changes were modifications of the constitutional obstacles to administrative reform, limitations on the constitutional guarantees for social security, and authority to create new sources of federal tax revenue. With the erosion of support for the Collor de Mello government during 1992, the proposals had little chance of passage, and the fundamental fiscal disequilibrium continued under the administration of Itamar Franco (1992-95), Collor de Mello's successor.
Fiscal Deficits and Inflation
The root of Brazilian inflation has been the monetization of the public sector's fiscal deficit, because deficits that are not financed by borrowing either from abroad or domestically must be covered by the creation of money. By the early 1990s, the old debate between the monetarists (see Glossary), who emphasized the central role of money supply growth in the inflationary process, and the structuralists (see Glossary), who attributed price increases to supply problems in developing economies like Brazil's, was viewed as an obsolete and largely sterile discussion. Instead, debate focused on the causal relationship between inflation and the money supply, and on how much freedom the government actually had in determining money-supply growth.
However important monetization of the public sector's fiscal deficit may have been in the past in either initiating or accelerating inflation, the reinforcement of the inflationary process by past inflation and by expectations of future inflation was an important part of the Brazilian experience in the 1980s and 1990s. In Brazil the feedback effect of past inflation has been institutionalized in an extensive indexation or "monetary correction" (correção monetária
) system, which was developed and extended to most markets between 1964 and 1970. The result was an economy in which apparently modest initial shocks could be transformed into high and continuing inflation. Recognition of this feedback effect in the early 1980s played a role in the design of the 1986 Cruzado Plan, as well as in subsequent stabilization attempts, notably the Real
Plan in 1994. The inflation indexation system, which in the 1970s had been virtually unquestioned, was increasingly blamed for contributing to the continuation and acceleration of inflation in the 1980s and early 1990s.
Although inflation accelerated significantly in the 1980s, it had long been a feature of Brazil's economy. The first major inflationary surge began in the late 1950s and continued until 1964, in part the result of the monetary accommodation of fiscal pressures resulting from a sharp rise in government expenditures. A second surge began in the 1970s, partly as a result of the external shocks caused by the rise in energy prices. The indexation system served as a vehicle for amplifying energy price increases into higher widespread price increases than might have occurred. Inflation worsened dramatically in the 1980s, however, as Brazil lost its access to foreign capital markets and domestic borrowing to finance the growing public-sector deficit became increasingly expensive (see table 15, Appendix). Inevitably, money creation became one of the primary ways to finance the deficit.
It is difficult for non-Brazilians to grasp the significance of double-digit inflation for forty years, with triple- and even quadruple-digit inflation in the 1980s. By the late 1980s, annual rates of inflation were almost meaningless, and Brazilians themselves routinely characterized inflation by its monthly rate, which in the early 1990s was over 35 percent. Between the end of World War II and Brazil's Real
Plan in 1994, the price level had increased more than 100 billion times.
Not only did inflation accelerate over the 1980s, but the rate became more variable and less predictable. The frequency of price adjustments increased, and wage and salary adjustments that had once occurred annually were adjusted semiannually, then quarterly, and in some markets monthly, as inflation accelerated. In other markets, especially the capital markets, inflation had similar effects in shortening contract periods. Few borrowers or lenders would dare to make long-term commitments, and by the late 1980s most Brazilian firms, as well as most wealthier individuals, held any excess assets in short-term, highly liquid deposits that were literally known as the "overnight."
The rise in indexation in Brazil after 1964 had permitted the government to tap the supply of domestic saving by selling indexed government bonds to savers, who were thus protected against the effects of inflation on the value of such assets. Although indexed bonds were regarded as a great success in the 1960s and 1970s, the need to pay not only the interest but also the inflation adjustment became an increasing burden for the government in the 1980s.
Despite the burden that indexed bonds placed on government finances as inflation accelerated, inflation itself appears to have been an important source of revenue for the government. The "inflation tax," which is the real income that the government receives through the issuance of new money, tends to increase with inflation, because nonindexed money or partially indexed financial assets issued by the government lose their real value. This loss in spending power incurred by the holders of money is in effect a tax, because the government spending financed by money creation is paid for by the loss in value of the money held by the public. Attempts have been made to measure the income that the Brazilian government earned through the inflation tax, and some estimates suggest that income from this source in the 1980s was over 3 or 4 percent of GDP.
Data as of April 1997
- Brazil-Brazil and International Conflicts, 1917-95
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Background | | Following more than three centuries under Portuguese rule, Brazil peacefully gained its independence in 1822, maintaining a monarchical system of government until the abolition of slavery in 1888 and the subsequent proclamation of a republic by the military in 1889. Brazilian coffee exporters politically dominated the country until populist leader Getulio VARGAS rose to power in 1930. By far the largest and most populous country in South America, Brazil underwent more than half a century of populist and military government until 1985, when the military regime peacefully ceded power to civilian rulers. Brazil continues to pursue industrial and agricultural growth and development of its interior. Exploiting vast natural resources and a large labor pool, it is today South America's leading economic power and a regional leader. Highly unequal income distribution and crime remain pressing problems.
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Location | | Eastern South America, bordering the Atlantic Ocean
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Area(sq km) | | total: 8,514,877 sq km land: 8,459,417 sq km water: 55,460 sq km note: includes Arquipelago de Fernando de Noronha, Atol das Rocas, Ilha da Trindade, Ilhas Martin Vaz, and Penedos de Sao Pedro e Sao Paulo
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Geographic coordinates | | 10 00 S, 55 00 W
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Land boundaries(km) | | total: 16,885 km border countries: Argentina 1,261 km, Bolivia 3,423 km, Colombia 1,644 km, French Guiana 730 km, Guyana 1,606 km, Paraguay 1,365 km, Peru 2,995 km, Suriname 593 km, Uruguay 1,068 km, Venezuela 2,200 km
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Coastline(km) | | 7,491 km
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Climate | | mostly tropical, but temperate in south
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Elevation extremes(m) | | lowest point: Atlantic Ocean 0 m highest point: Pico da Neblina 3,014 m
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Natural resources | | bauxite, gold, iron ore, manganese, nickel, phosphates, platinum, tin, uranium, petroleum, hydropower, timber
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Land use(%) | | arable land: 6.93% permanent crops: 0.89% other: 92.18% (2005)
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Irrigated land(sq km) | | 29,200 sq km (2003)
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Total renewable water resources(cu km) | | 8,233 cu km (2000)
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Freshwater withdrawal (domestic/industrial/agricultural) | | total: 59.3 cu km/yr (20%/18%/62%) per capita: 318 cu m/yr (2000)
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Natural hazards | | recurring droughts in northeast; floods and occasional frost in south
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Environment - current issues | | deforestation in Amazon Basin destroys the habitat and endangers a multitude of plant and animal species indigenous to the area; there is a lucrative illegal wildlife trade; air and water pollution in Rio de Janeiro, Sao Paulo, and several other large cities; land degradation and water pollution caused by improper mining activities; wetland degradation; severe oil spills
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Environment - international agreements | | party to: Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, Whaling signed, but not ratified: none of the selected agreements
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Geography - note | | largest country in South America; shares common boundaries with every South American country except Chile and Ecuador
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Population | | 198,739,269 note: Brazil conducted a census in August 2000, which reported a population of 169,872,855; that figure was about 3.8% lower than projections by the US Census Bureau, and is close to the implied underenumeration of 4.6% for the 1991 census (July 2009 est.)
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Age structure(%) | | 0-14 years: 26.7% (male 27,092,880/female 26,062,244) 15-64 years: 66.8% (male 65,804,108/female 67,047,725) 65 years and over: 6.4% (male 5,374,230/female 7,358,082) (2009 est.)
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Median age(years) | | total: 28.6 years male: 27.8 years female: 29.3 years (2009 est.)
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Population growth rate(%) | | 1.199% (2009 est.)
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Birth rate(births/1,000 population) | | 18.43 births/1,000 population (2009 est.)
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Death rate(deaths/1,000 population) | | 6.35 deaths/1,000 population (July 2009 est.)
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Net migration rate(migrant(s)/1,000 population) | | -0.09 migrant(s)/1,000 population (2009 est.)
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Urbanization(%) | | urban population: 86% of total population (2008) rate of urbanization: 1.8% annual rate of change (2005-10 est.)
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Sex ratio(male(s)/female) | | at birth: 1.05 male(s)/female under 15 years: 1.04 male(s)/female 15-64 years: 0.98 male(s)/female 65 years and over: 0.73 male(s)/female total population: 0.98 male(s)/female (2009 est.)
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Infant mortality rate(deaths/1,000 live births) | | total: 22.58 deaths/1,000 live births male: 26.16 deaths/1,000 live births female: 18.83 deaths/1,000 live births (2009 est.)
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Life expectancy at birth(years) | | total population: 71.99 years male: 68.43 years female: 75.73 years (2009 est.)
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Total fertility rate(children born/woman) | | 2.21 children born/woman (2009 est.)
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Nationality | | noun: Brazilian(s) adjective: Brazilian
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Ethnic groups(%) | | white 53.7%, mulatto (mixed white and black) 38.5%, black 6.2%, other (includes Japanese, Arab, Amerindian) 0.9%, unspecified 0.7% (2000 census)
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Religions(%) | | Roman Catholic (nominal) 73.6%, Protestant 15.4%, Spiritualist 1.3%, Bantu/voodoo 0.3%, other 1.8%, unspecified 0.2%, none 7.4% (2000 census)
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Languages(%) | | Portuguese (official and most widely spoken language); note - less common languages include Spanish (border areas and schools), German, Italian, Japanese, English, and a large number of minor Amerindian languages
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Country name | | conventional long form: Federative Republic of Brazil conventional short form: Brazil local long form: Republica Federativa do Brasil local short form: Brasil
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Government type | | federal republic
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Capital | | name: Brasilia geographic coordinates: 15 47 S, 47 55 W time difference: UTC-3 (2 hours ahead of Washington, DC during Standard Time) daylight saving time: +1hr, begins third Sunday in October; ends third Sunday in February note: Brazil is divided into four time zones, including one for the Fernando de Noronha Islands
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Administrative divisions | | 26 states (estados, singular - estado) and 1 federal district* (distrito federal); Acre, Alagoas, Amapa, Amazonas, Bahia, Ceara, Distrito Federal*, Espirito Santo, Goias, Maranhao, Mato Grosso, Mato Grosso do Sul, Minas Gerais, Para, Paraiba, Parana, Pernambuco, Piaui, Rio de Janeiro, Rio Grande do Norte, Rio Grande do Sul, Rondonia, Roraima, Santa Catarina, Sao Paulo, Sergipe, Tocantins
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Constitution | | 5-Oct-88
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Legal system | | based on Roman codes; has not accepted compulsory ICJ jurisdiction
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Suffrage | | voluntary between 16 and 18 years of age and over 70; compulsory over 18 and under 70 years of age; note - military conscripts do not vote
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Executive branch | | chief of state: President Luiz Inacio LULA da Silva (since 1 January 2003); Vice President Jose ALENCAR Gomes da Silva (since 1 January 2003); note - the president is both the chief of state and head of government head of government: President Luiz Inacio LULA da Silva (since 1 January 2003); Vice President Jose ALENCAR Gomes da Silva (since 1 January 2003) cabinet: Cabinet appointed by the president elections: president and vice president elected on the same ticket by popular vote for a single four-year term; election last held 1 October 2006 with runoff 29 October 2006 (next to be held 3 October 2010 and, if necessary, 31 October 2010) election results: Luiz Inacio LULA da Silva (PT) reelected president - 60.83%, Geraldo ALCKMIN (PSDB) 39.17%
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Legislative branch | | bicameral National Congress or Congresso Nacional consists of the Federal Senate or Senado Federal (81 seats; 3 members from each state and federal district elected according to the principle of majority to serve eight-year terms; one-third and two-thirds elected every four years, alternately) and the Chamber of Deputies or Camara dos Deputados (513 seats; members are elected by proportional representation to serve four-year terms) elections: Federal Senate - last held 1 October 2006 for one-third of the Senate (next to be held in October 2010 for two-thirds of the Senate); Chamber of Deputies - last held 1 October 2006 (next to be held in October 2010) election results: Federal Senate - percent of vote by party - NA; seats by party - PFL 6, PSDB 5, PMDB 4, PTB 3, PT 2, PDT 1, PSB 1, PL 1, PPS 1, PRTB 1, PP 1, PCdoB 1; Chamber of Deputies - percent of vote by party - NA; seats by party - PMDB 89, PT 83, PFL 65, PSDB 65, PP 42, PSB 27, PDT 24, PL 23, PTB 22, PPS 21, PCdoB 13, PV 13, PSC 9, other 17; note - as of 1 January 2009, the composition of the entire legislature is as follows: Federal Senate - seats by party - PMDB 21, DEM (formerly PFL) 12, PSDB 13, PT 12, PTB 7, PDT 5, PR 4, PSB 2, PCdoB 1, PRB 1, PP 1, PSC 1, PSOL 1; Chamber of Deputies - seats by party - PMDB 95, PT 79, PSDB 59, DEM (formerly PFL) 53, PR 44, PP 40, PSB 29, PDT 25, PTB 19, PPS 14, PV 14, PCdoB 13, PSC 11, PMN 5, PRB 4, PHS 3, PSOL 3, PTC 1, PTdoB 1
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Judicial branch | | Supreme Federal Tribunal or STF (11 ministers are appointed for life by the president and confirmed by the Senate); Higher Tribunal of Justice; Regional Federal Tribunals (judges are appointed for life); note - though appointed "for life," judges, like all federal employees, have a mandatory retirement age of 70
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Political pressure groups and leaders | | Landless Workers' Movement or MST other: labor unions and federations; large farmers' associations; religious groups including evangelical Christian churches and the Catholic Church
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International organization participation | | AfDB (nonregional member), BIS, CAN (associate), CPLP, FAO, G-15, G-20, G-24, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC, LAES, LAIA, LAS (observer), Mercosur, MIGA, MINURCAT, MINURSO, MINUSTAH, NAM (observer), NSG, OAS, OPANAL, OPCW, Paris Club (associate), PCA, RG, SICA (observer), UN, UN Security Council (temporary), UNASUR, UNCTAD, UNESCO, UNFICYP, UNHCR, UNIDO, Union Latina, UNITAR, UNMIL, UNMIS, UNMIT, UNOCI, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO
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Flag description | | green with a large yellow diamond in the center bearing a blue celestial globe with 27 white five-pointed stars (one for each state and the Federal District) arranged in the same pattern as the night sky over Brazil; the globe has a white equatorial band with the motto ORDEM E PROGRESSO (Order and Progress)
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Economy - overview | | Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil's economy outweighs that of all other South American countries and Brazil is expanding its presence in world markets. From 2003 to 2007, Brazil ran record trade surpluses and recorded its first current account surpluses since 1992. Productivity gains coupled with high commodity prices contributed to the surge in exports. Brazil improved its debt profile in 2006 by shifting its debt burden toward real denominated and domestically held instruments. LULA da Silva restated his commitment to fiscal responsibility by maintaining the country's primary surplus during the 2006 election. Following his second inauguration in October of that year, LULA da Silva announced a package of further economic reforms to reduce taxes and increase investment in infrastructure. Brazil's debt achieved investment grade status early in 2008, but the government's attempt to achieve strong growth while reducing the debt burden created inflationary pressures. For most of 2008, the Central Bank embarked on a restrictive monetary policy to stem these pressures. Since the onset of the global financial crisis in September, Brazil's currency and its stock market - Bovespa - have significantly lost value, -41% for Bovespa for the year ending 30 December 2008. Brazil incurred another current account deficit in 2008, as world demand and prices for commodities dropped in the second-half of the year.
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GDP (purchasing power parity) | | $1.998 trillion (2008 est.) $1.901 trillion (2007 est.) $1.798 trillion (2006 est.) note: data are in 2008 US dollars
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GDP (official exchange rate) | | $1.573 trillion (2008 est.)
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GDP - real growth rate(%) | | 5.1% (2008 est.) 5.7% (2007 est.) 4% (2006 est.)
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GDP - per capita (PPP) | | $10,200 (2008 est.) $9,800 (2007 est.) $9,400 (2006 est.) note: data are in 2008 US dollars
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GDP - composition by sector(%) | | agriculture: 6.7% industry: 28% services: 65.3% (2008 est.)
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Labor force | | 93.65 million (2008 est.)
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Labor force - by occupation(%) | | agriculture: 20% industry: 14% services: 66% (2003 est.)
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Unemployment rate(%) | | 7.9% (2008 est.) 9.3% (2007 est.)
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Population below poverty line(%) | | 31% (2005)
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Household income or consumption by percentage share(%) | | lowest 10%: 1.1% highest 10%: 43% (2007)
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Distribution of family income - Gini index | | 56.7 (2005) 60.7 (1998)
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Investment (gross fixed)(% of GDP) | | 19% of GDP (2008 est.)
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Budget | | revenues: NA expenditures: NA
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Inflation rate (consumer prices)(%) | | 5.7% (2008 est.) 3.6% (2007 est.)
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Stock of money | | $95.03 billion (31 December 2008) $131.1 billion (31 December 2007)
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Stock of quasi money | | $724.5 billion (31 December 2008) $792.8 billion (31 December 2007)
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Stock of domestic credit | | $1.249 trillion (31 December 2008) $1.377 trillion (31 December 2007)
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Market value of publicly traded shares | | $589.4 billion (31 December 2008) $1.37 trillion (31 December 2007) $711.1 billion (31 December 2006)
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Economic aid - recipient | | $191.9 million (2005)
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Public debt(% of GDP) | | 38.8% of GDP (2008 est.) 52% of GDP (2004 est.)
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Agriculture - products | | coffee, soybeans, wheat, rice, corn, sugarcane, cocoa, citrus; beef
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Industries | | textiles, shoes, chemicals, cement, lumber, iron ore, tin, steel, aircraft, motor vehicles and parts, other machinery and equipment
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Industrial production growth rate(%) | | 4.3% (2008 est.)
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Current account balance | | -$28.19 billion (2008 est.) $1.551 billion (2007 est.)
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Exports | | $197.9 billion (2008 est.) $160.6 billion (2007 est.)
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Exports - commodities(%) | | transport equipment, iron ore, soybeans, footwear, coffee, autos
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Exports - partners(%) | | US 14.4%, China 12.4%, Argentina 8.4%, Netherlands 5%, Germany 4.5% (2008)
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Imports | | $173.1 billion (2008 est.) $120.6 billion (2007 est.)
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Imports - commodities(%) | | machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics
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Imports - partners(%) | | US 14.9%, China 11.6%, Argentina 7.9%, Germany 7% (2008)
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Reserves of foreign exchange and gold | | $193.8 billion (31 December 2008 est.) $180.3 billion (31 December 2007 est.)
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Debt - external | | $262.9 billion (31 December 2008) $240.5 billion (31 December 2007)
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Stock of direct foreign investment - at home | | $294 billion (31 December 2008 est.) $248.9 billion (31 December 2007 est.)
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Stock of direct foreign investment - abroad | | $127.5 billion (31 December 2008 est.) $107.1 billion (31 December 2007 est.)
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Exchange rates | | reals (BRL) per US dollar - 1.8644 (2008 est.), 1.85 (2007 est.), 2.1761 (2006), 2.4344 (2005), 2.9251 (2004)
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Currency (code) | | real (BRL)
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Telephones - main lines in use | | 41.141 million (2008)
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Telephones - mobile cellular | | 150.641 million (2008)
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Telephone system | | general assessment: good working system; fixed-line connections have remained relatively stable in recent years and stand at about 20 per 100 persons; less expensive mobile cellular technology is a major driver in expanding telephone service to the low-income segment of the population with mobile-cellular telephone density reaching 80 per 100 persons domestic: extensive microwave radio relay system and a domestic satellite system with 64 earth stations; mobile-cellular usage has more than tripled in the past 5 years international: country code - 55; landing point for a number of submarine cables, including Atlantis 2, that provide direct links to South and Central America, the Caribbean, the US, Africa, and Europe; satellite earth stations - 3 Intelsat (Atlantic Ocean), 1 Inmarsat (Atlantic Ocean region east), connected by microwave relay system to Mercosur Brazilsat B3 satellite earth station (2008)
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Internet country code | | .br
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Internet users | | 64.948 million (2008)
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Airports | | 4,000 (2009)
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Pipelines(km) | | condensate/gas 62 km; gas 9,892 km; liquid petroleum gas 353 km; oil 4,517 km; refined products 4,465 km (2008)
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Roadways(km) | | total: 1,751,868 km paved: 96,353 km unpaved: 1,655,515 km (2004)
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Ports and terminals | | Guaiba, Ilha Grande, Paranagua, Rio Grande, Santos, Sao Sebastiao, Tubarao
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Military branches | | Brazilian Army (Exercito Brasileiro, EB), Brazilian Navy (Marinha do Brasil (MB), includes Naval Air and Marine Corps (Corpo de Fuzileiros Navais)), Brazilian Air Force (Forca Aerea Brasileira, FAB) (2009)
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Military service age and obligation(years of age) | | 21-45 years of age for compulsory military service; conscript service obligation - 9 to 12 months; 17-45 years of age for voluntary service; an increasing percentage of the ranks are "long-service" volunteer professionals; women were allowed to serve in the armed forces beginning in early 1980s when the Brazilian Army became the first army in South America to accept women into career ranks; women serve in Navy and Air Force only in Women's Reserve Corps (2001)
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Manpower available for military service | | males age 16-49: 52,523,552 females age 16-49: 52,628,945 (2009 est.)
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Manpower fit for military service | | males age 16-49: 38,043,555 females age 16-49: 44,267,520 (2009 est.)
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Manpower reaching militarily significant age annually | | male: 1,690,031 female: 1,630,851 (2009 est.)
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Military expenditures(% of GDP) | | 2.6% of GDP (2006 est.)
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Disputes - international | | unruly region at convergence of Argentina-Brazil-Paraguay borders is locus of money laundering, smuggling, arms and illegal narcotics trafficking, and fundraising for extremist organizations; uncontested boundary dispute with Uruguay over Isla Brasilera at the confluence of the Quarai/Cuareim and Invernada rivers, that form a tripoint with Argentina; the Itaipu Dam reservoir covers over a once contested section of Brazil-Paraguay boundary west of Guaira Falls on the Rio Parana; an accord placed the long-disputed Isla Suarez/Ilha de Guajara-Mirim, a fluvial island on the Rio Mamore, under Bolivian administration in 1958, but sovereignty remains in dispute
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Electricity - production(kWh) | | 438.8 billion kWh (2007 est.)
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Electricity - production by source(%) | | fossil fuel: 8.3% hydro: 82.7% nuclear: 4.4% other: 4.6% (2001)
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Electricity - consumption(kWh) | | 404.3 billion kWh (2007 est.)
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Electricity - exports(kWh) | | 2.034 billion kWh (2007 est.)
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Electricity - imports(kWh) | | 42.06 billion kWh; note - supplied by Paraguay (2008 est.)
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Oil - production(bbl/day) | | 2.422 million bbl/day (2008 est.)
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Oil - consumption(bbl/day) | | 2.52 million bbl/day (2008 est.)
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Oil - exports(bbl/day) | | 570,100 bbl/day (2007 est.)
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Oil - imports(bbl/day) | | 632,900 bbl/day (2007 est.)
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Oil - proved reserves(bbl) | | 12.62 billion bbl (1 January 2009 est.)
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Natural gas - production(cu m) | | 12.62 billion cu m (2008 est.)
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Natural gas - consumption(cu m) | | 23.65 billion cu m (2008 est.)
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Natural gas - exports(cu m) | | 0 cu m (2008)
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Natural gas - proved reserves(cu m) | | 365 billion cu m (1 January 2009 est.)
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HIV/AIDS - adult prevalence rate(%) | | 0.6% (2007 est.)
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HIV/AIDS - people living with HIV/AIDS | | 730,000 (2007 est.)
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HIV/AIDS - deaths | | 15,000 (2007 est.)
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Literacy(%) | | definition: age 15 and over can read and write total population: 88.6% male: 88.4% female: 88.8% (2004 est.)
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School life expectancy (primary to tertiary education)(years) | | total: 14 years male: 14 years female: 15 years (2005)
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Education expenditures(% of GDP) | | 4% of GDP (2004)
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