Former Brazilian President Fernando Henrique Cardoso visited the Bank on
December 9th to discuss the impact of social reform policies enacted during his
two-term presidency from 1995 through 2003. Prior to a lecture he delivered to
a Bank-wide audience, he sat down with B-SPAN to discuss his perspectives on economic
and social policy developments during his Administration, as well as thoughts
he had on the role played by the World Bank. Interviewees included Roberto Zagha
and Indermit Gill, economic advisors in the Bank’s Poverty Reduction and Economic
Management network, and David Wheeler, lead economist in the Bank’s Development
Economics Research Group.
Zagha began by noting the progress made during the Cardoso Administration on
inflation, institution building and social welfare, and asked the President
whether social gains could be sustained without better economic growth in Brazil.
Wheeler asked the President for his perspective on the relationship between
the Bank and Brazil during his term and suggestions on the role the Bank could
play in the future.
The President said the rate of growth in Brazil over the last two decades was
deceiving. Following implementation of the Real Plan to improve the financial
stability of the country in the early 1990’s, growth rose to 3% annually. Though
this made Brazil among the fastest growers in the region, he acknowledge this
was not enough. Cardoso suggested a series of international financial crises
throughout the 1990’s had an important impact on Brazil’s economic health. He
also suggested growth was impacted in 2002 because of 9/11 and financial markets
were nervous about the change in government as Brazilians prepared for new elections.
But there were significant productivity increases, he said, and cited the agricultural
sector as an example. Brazil has also made significant investments in its manufacturing,
infrastructure and energy sectors. Growth was not higher, he emphasized, because
of international financial volatility. The potential exists to increase growth
to 7%, he said.
President Cardoso said the Bank had played a positive role during his Administration.
He called it more oriented toward social policies, and characterized the shift
away from emphasizing infrastructure lending as important. He also suggested
a rebalancing of the Bank’s portfolio by increasing investments in infrastructure
in the future would be positive. Modernizing Brazil’s manufacturing sector would
create jobs. He noted the difficulty faced by the Bank since the amount of its
global lending portfolio is comparable to that of the Brazilian Bank for Development,
approximately $US 12 billion annually. He said the Bretton Woods institutions
needed to be reformed.
Gill asked for the President’s thoughts on institutional development in his
country. Cardoso said institutions needed to change so social progress could
be made. This was an important function of democracy, he suggested. Necessary
in this process was decentralization in education and health. With attention
on the federal government, managing efficiency and controlling corruption at
local levels were also important to the effort. The President admitted that
professionalizing the government work force was an important task yet undone.
Gill noted inflation reductions and efficiency gains lowered poverty rates
in Brazil, but 50 million people remain under the poverty line. He asked how
more potential gains could be achieved. Economic growth, Cardoso said, was necessary
but not sufficient by itself. Social policies and programs will still be important.
The focus should remain on the poorest of the population. He emphasized these
initiatives need the benefit of time for their impact to become fully apparent.
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