This content is from: Local Insights

Brazil

In the aftermath of the Asian financial crisis, the government can claim two major achievements in reforms to reduce public deficit:

  • On February 10 1998, the Senate approved a constitutional amendment lifting existing job guarantees for public servants and requiring all layers of government to limit payroll costs to 60% of revenues. A second round of voting is expected to be completed by March 4 1998; and
  • On February 11 1998, the lower house approved, in the first round of voting, a constitutional amendment for reform of the pension system.

The final approval of the two amendments will mark the completion of the second phase of overall reform by president Cardoso. The first phase was completed in 1995, when measures were passed eliminating many existing restrictions on privatization. Further phases will relate to tax and labour reforms.

On February 11 1998 the Senate approved a law which characterizes money laundering as a crime with penalties of three to 10 years imprisonment. The law establishes a system of fines and permits confiscation of assets. Financial institutions will be required to monitor and document the activities of their clients, under penalties of fines and possible suspension of their activities.

Eliana Maria Filippozzi

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