The recent economic history of Brazil can provide insight into some of the forces driving deforestation and explain the present state of the Brazilian economy at the close of the 20th century.
In 1985, after 21 years of military rule, political power was turned over to civilians in what was considered a remarkably successful political transition. However, the economic transition, or lack thereof, was a different story.
As civilians came to power they found Brazil still plagued with a host of economic problems. A long tradition of free spending on extravagantly wasteful and irresponsible government programs, combined with the loose federal system, had resulted in a massive budget deficit that only grew with each passing day. This spending spurred horrendous inflation (reaching 2500% in 1993) which was most devastating to the poor, who were most likely to stash their life savings in cash under their mattress, not in banks where it could earn interest to keep pace with inflation. The bad situation was exacerbated by poor tax collection, a weak system of education, and uncompetitive export industries.
H.F. Cardoso became finance minister and introduced the Real plan to combat inflation. The plan worked astonishingly well and paved the road for Cardoso's election to president in 1994. Billions in foreign investment flowed into Brazil making it one of the hottest international markets from 1995-1997.
Things changed in October 1997. As the real weakened and interest rates doubled, the Central Bank spent billions defending the currency. Cardoso announced austerity measures for the country. By 1998, the economic pressure eased and some of the planned austerity measures were shelved. When the Russian economy collapsed in August 1998 and the Brazilian budget deficit swelled, investors panicked and money flooded out. President Cardoso tried to calm the panic by reaffirming his commitment to the real and announcing $20 billion in spending cuts and tax increases for 1999. The International Monetary Fund (IMF) coordinated a $41.5 billion loan if Brazil met certain targets. The situation looked like it might improve until the governor of Minas Gerais state declared a moratorium on debt payments to the federal government (witness the weak federal system). On January 13, 1999, the governor of the Central Bank resigned and the successor effectively allowed the real to float against the dollar for the first time ever. The real plunged, more investment money poured out of the country, interest rates shot up, and debt payments became ever more difficult to meet.
The effect of Brazil's economic troubles in 1999-2000 on its tropical rainforests were expected to be mixed. On one hand, the weak economy means fewer new development projects and less clearing for agriculture. On the flip side, the reduction of funding for conservation projects and increased poverty for peasants could spur increased deforestation.
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For current information I highly recommend trying the CIA and FAO links below.
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