Cruzado Plan

Cruzado Plan

  • Submitted By: guspc
  • Date Submitted: 11/06/2010 3:42 PM
  • Category: Business
  • Words: 683
  • Page: 3
  • Views: 364

Gus Cavalcante

The Cruzado Plan, a Painful Experience to Brazil’s Population

What seemed to be a good and long life plan that would help the population, turned to be a short life sparkle in the Brazil’s economy. The new financial plan consisted in the change in the currency, the freezing of prices and salaries and the people’s trust and help, but the trust of the people in the government turned to be something painful.
In 1985, Brazil lived a financial hard time; the elected president Tancredo Neves didn’t assume the presidency because in the day before he was admitted to the hospital with severe abdominal pain and in a few months later he passed away. Jose Sarney, the vice president became the nation’s president in 1986. It was a difficult time to be the president, with the inflation between 250% and 300% Brazil’s economists with the presidency decided to change the currency, freeze the price of products, in which the government allowed the population to be price supervisors, in this case the people would denounce the stores if the prices were different than the ones stipulated by the government and salaries, in the case of the salaries, the employee would get the average of the last 3 months of work as their salary.
This plan worked well in its first months, an article in the National Geographic Magazine reports that the inflation had fallen down to 25%, and the economy had grown by 8%, among the highest rates in the world (Vesilind, 1987), but with the freezing of prices big suppliers and farmers weren’t getting as much money as before or in some cases they weren’t getting any money or even paying for it, which led some of them to secretly ask the stores for more money or slow down the sales, doing so they wouldn’t lose as much as other suppliers and farmers.
Later on, the people who in the beginning trusted in the government, at that point were scared about the future. The main food items were missing in the stores and with parents to provide for...

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