Civil Society Participation in World Bank and Inter-American Development Bank Programs: The Case of Brazil

Abstract

out an agreement with the International Monetary Fund (IMF) and while retaining significant room to maneuver in relation to the prevailing ortho doxy of adjustment. The Piano Real was initially aided by an ample sup ply of international capital flows to finance temporary imbalances and by income from the privatization of state-owned assets. But Brazil's fiscal front remained weak, leading to a twofold increase in the internal debt. To retain the value of the country's currency, the government raised interest rates, a step that led to a spiraling of the problem. By 1998, the govern ment was increasingly desperate for extrabudgetary funding sources and sought an agreement with the IMF. The negotiations that led to an agree ment with the IMF profoundly altered the situation, regulating the nature and schedule of adjustment. By the end of that year, both the press and public opinion believed the IMF dictated the country's economic policies.1 Because of subsequent budget cuts, funding from multilateral development banks (MDBs) has become relatively more significant; in many cases, it is directed at sectors that have seen their budgets cut by up to 60 percent in the course of fiscal adjustment. The case of Brazil presents several unique features. The government has always tried to portray a situation of control over the dictates of inter national financial creditors. With regard to projects involving funding by MDBs, such as the World Bank and the Inter-American Development Bank (IDB), Brazilian authorities projected an image of begetters and managers of projects that happened to be looking for a sponsor rather than of mere implementors of MDBs' conditions. In Brazil, doubts about the sovereignty of the policies and projects are a recurring theme. Even when the projects imply reform of the state itself, the government presents them as its own ideas financed by the MDBs. The agreement with the IMF and