The presidency of Fernando Henrique Cardoso began on 1 January 1995, with the inauguration of Fernando Henrique, also known as FHC, and ended on 1 January 2003, when Luiz Inácio Lula da Silva took over the presidency.
The main achievements of his administration were the maintenance of economic stability with the consolidation of the Real Plan, the privatization of state-owned companies, the creation of regulatory agencies, the changes to the legislation governing civil servants and the introduction of income transfer programs such as Bolsa Escola.
The FHC government recorded GDP growth of 19.39% (an average of 2.42%) and per capita income growth of 6.99% (an average of 0.87%). He took office with inflation at 22.41% and left at 12.53%.
Internal policy
Economy During Fernando Henrique Cardoso's presidency, the Brazilian economy remained stable as a consequence of the inflation control achieved with the Real Plan. Brazil began to experience an economic expansion, especially in the automobile sector. Volkswagen settled in Resende, Rio de Janeiro, Iveco in Minas Gerais and Internacional/Agrale in Rio Grande do Sul. The average annual inflation rate, measured by the Broad National Consumer Price Index (IPCA), was 9.71% in his first term and 8.77% in his second. In 1995, the Ministry of Administration and State Reform, headed by Bresser Pereira, elaborated the Master Plan for State Reform (Portuguese: ), which aimed to create conditions for the reconstruction of public administration on a modern and rational basis.
After the success of the Real Plan, the priority for FHC's administration was to stabilize the currency and promote economic growth. In 1995, the federal government submitted a series of measures for approval by Congress to amend the 1988 Federal Constitution and promote a structural change in Brazil's state structure to adapt it to the new circumstances of the global economy. The initiatives included administrative and social security reform, deregulation of markets, flexibility in labor hiring rules and abolition of state monopolies in the steel, electricity and telecommunications sectors.
In 1999, the tripé macroeconômico, which formed the new basis of economic policy and was composed of a floating exchange rate policy, fiscal targets and inflation targets, was implemented. Fernando Henrique Cardoso privatized numerous sectors considered deficient, such as telecommunications, electricity distribution, mining and finance. The opposition, especially the PT, contested these practices. In eight years, the minimum wage went from 70 to 200 reais in absolute terms. In real terms, its growth was 44.28%. The average GDP growth rate was 2.33% per year and the HDI (Human Development Index) rose from 0.753 in 1995 to 0.789 in 2000.
Crises
The FHC government faced several international recessions, such as the Mexican crisis in 1995, the Asian crisis between 1997 and 1998 and the Russian crisis between 1998 and 1999. Brazil was affected by the Argentine crisis, the terrorist attacks in the US on 11 September 2001 and the falsification of the Enron Corporation balance sheets. Internally, it faced a crisis in 1999 when the real depreciated significantly after the Central Bank abandoned the fixed exchange rate regime and adopted a floating exchange rate regime. In 2002, the prediction of Lula's victory in the next presidential election triggered a massive shortfall in hot money and increased the price of the dollar to almost R$4.00.
At every crisis that occurred in other emerging countries, the Brazilian economy suffered an abrupt withdrawal of speculative international capital, forcing Fernando Henrique Cardoso to ask the IMF for help three times. His supporters defended him by saying that upon taking office, Brazil was bankrupt and with practically no currency in dollars, requiring him to compromise on several fronts in order to stabilize the country and pass it on to his successor with properly organized finances.
Increase in public debt During Fernando Henrique Cardoso's first term in office, the imbalance led to an increase in public debt which, at present values, stands at around R$22.8 billion, according to calculations based on data from the Central Bank. On 1 January 1995, the public sector owed R$153.163 billion at then current values. After three consecutive years of public deficit, the debt closed 97 at R$306.494 billion. Between 1995 and 1998, the public sector spent more than it collected, which created a primary deficit of R$7.22 billion. Considering the variation in the economy's basic interest rate since 1995, the interest expenses resulting from this indebtedness reached R$15.58 billion.
Fiscal Responsibility Law (LRF) Approved by Fernando Henrique Cardoso on 4 May 2000, and published in the Federal Official Gazette the following day, the Fiscal Responsibility Law (LRF) requires that finances be presented detailed to the Court of Accounts (Federal, State or Municipal). If the accounts are rejected, an investigation into the responsibility of the Executive branch bodies and their members for any irregularities is launched, which can result in fines or bans on candidates running for election. Although the Executive is primarily responsible for public finances, the Legislative and Judicial branches are also subject to this rule.
The LRF also introduced a limit on personnel spending. The federal government is allowed to spend up to 50% of current net revenue, while states, municipalities and the Federal District can spend up to 60%. If spending reaches 95% of the established limit, it becomes forbidden to grant advantages, create positions and jobs and pay overtime. Before the law, the federal government had no mechanism to measure the country's total indebtedness.
Health
Fernando Henrique Cardoso's administration was characterized by structural changes in the Brazilian health system. The Basic Operational Standard 96 () and the Operational Standard for Health Care () were published, which contributed to the decentralization of the SUS. The creation of the Provisional Contribution on Financial Transactions () and the approval of Constitutional Amendment 29, which better defined the participation of the three spheres of government in the financing of the SUS and established minimum percentages of their revenues to be invested in public health actions and services, also stand out.
The Brazilian Health Regulatory Agency (Agência Nacional de Vigilância Sanitária - ANVISA) and the Brazilian Supplementary Health Agency (Agência Nacional de Saúde Suplementar - ANS) were created to improve Brazil's management and performance in health care, and to comply with the Health Plans Law, respectively. The period was characterized by intense debates on supplementary health and the regulation of health plans.
The approval of the Basic Care Budget (Piso de Atenção Básica - PAB), a regular and automatic transfer of federal funds, helped promote initiatives such as the Family Health Program (Programa Saúde da Família). The Project for the Reduction of Infant Mortality (Projeto para Redução da Mortalidade Infantil - PRMI), as part of the Solidarity Community Program (Programa Comunidade Solidária), the intensification of measures to combat cigarette consumption and the approval of Law No. 9.313, which determines the free distribution of antiretroviral treatment (ARV) to HIV/AIDS sufferers, are also noteworthy.
Environmental policy Deforestation in the Amazon increased during the first administration of Fernando Henrique Cardoso. In 1995, PRODES/INPE recorded the highest rate since 1988, with 29,059 square kilometers of cleared area. As a solution, the government raised the legal reserve area for rural properties in the Amazon from 50% to 80% and banned the cutting of mahogany and virola for two years, which limited logging, one of the activities responsible for deforestation in the region.
In 1998, large and extensive fires occurred in Roraima, which led to the implementation of the Program for the Prevention and Control of Burning and Forest Fires in the Arc of Development (Programa de Prevenção e Controle às Queimadas e Incêndios Florestais no Arco do Desenvolvimento - Proarco), aimed at reducing the practice of burning areas for pasture and plantations.
Brazil participated actively in the development of the Kyoto Protocol, an agreement signed by the signatory countries of the United Nations Climate Change Conference, which set targets for reducing greenhouse gas emissions applicable exclusively to developed countries, considered to be the main contributors to the accumulation of emissions in the atmosphere since the Second Industrial Revolution. Developed countries also committed to financing the adoption of "clean" technologies by developing countries. The Brazilian delegation contributed to the creation of the Clean Development Mechanism, the basis for the creation of a global carbon market with the aim of stimulating the financing of projects to reduce greenhouse gas emissions.
The FHC administration created the Brazilian Climate Change Forum (Fórum Brasileiro de Mudanças Climáticas) to carry out studies, advise the president and mobilize society's attention to the phenomenon identified in successive IPCC reports. The main laws associated with environmental policies created during the FHC government were:
National Water Resources Policy (Política Nacional de Recursos Hídricos - PNRH): established by the Water Law of 1997 and regulated by the National Water Agency (Agência Nacional de Águas - ANA), created in 2000. It introduced a national water resources management system and river basin committees and defined water as a public good and a scarce resource whose use must be charged to private individuals; Environmental Crimes Law: established sanctions that enabled the implementation and effective enforcement of the entire set of legislation related to the environment; National System of Conservation Units Law: defined 12 categories of Conservation Units with different degrees of preservation and sustainable use to improve their integrated planning.
Sports
The FHC government was responsible for creating the Extraordinary Ministry of Sports in 1995, with Pelé as its first minister. Under his guidance, the General Sports Law, also known as the Pelé Law, was created to deal with the democratization of sporting activities, freedom to practice sports and safety for practitioners of any sport. In 2019, the ministry was abolished by Jair Bolsonaro, but was reactivated by the Lula administration in 2023.
Education The FHC government created and implemented the Educational Information and Evaluation System (Sistema de Informações e Avaliação Educacional) in order to provide information and evaluate the quality of education at all levels and modalities. The government focused on universalizing primary education through the Fund for the Maintenance and Development of Primary Education and the Valorization of the Teaching Profession (Fundo de Manutenção e Desenvolvimento do Ensino Fundamental e Valorização do Magistério - FUNDEF), which allocated compulsory spending on education to primary education and distributed the funds to the municipalities. Important laws and documents designed to organize, plan and create coherence in Brazil's educational policy were produced, such as the Law of Guidelines and Bases and the National Curriculum Parameters in 1997 and the National Education Plan in 2001.
Social policies
In 1995, the Brazilian delegation, led by First Lady Ruth Cardoso, participated in the Beijing Conference organized by the United Nations. The event established an action program for gender equality and set a timetable for monitoring its implementation every five years. In the same year, the first legislation on quotas for women in elections in Brazil was approved with a minimum percentage of women candidates.