Collor and Franco Administrations
The first direct presidential election after 29 years was held on October 15, 1989 (first round) and November 15, 1989 (second round). Fernando Collor de Mello won the run-off election with 53% of the vote for a five-year term.
Collor's agenda focused on fighting corruption in Sarney's administration and completing the transition from the 21-year military rule to civilian government. Economic changes aimed to control soaring inflation and modernization.
Although he had massive support amongst the voters, the administration had a small parliamentary base as Collor's recently founded party had few deputies and no senators and faced fierce opposition from main parties that splintered from Democratic Alliance: the Brazilian Democratic Movement Party (PMDB), Liberals (PFL), and Social Democrats (Brazilian Social Democracy Party, PSDB).
His first act was known as Plano Collor: all savings accounts and financial investment were frozen, and the national currency was changed from Cruzado Novo to Cruzeiro (NCz$1,000 = Cr$1). Plano Collor had an initial success, but after six months, it failed in its main goal as inflation accelerated again. This started to erode Collor's prestige.
Economic changes included lifting import barriers exposing local companies to international competition. Many companies went bankrupt or were sold, unemployment grew and support for the government deteriorated.
Parliamentary elections were held on October 15, 1990 and the government failed to win a reliable base in Congress and the president started to lose support.
In May 1991, Fernando Collor was accused by his brother, Pedro Collor, of corruption, by condoning an influence peddling scheme run by his campaign treasurer, Paulo César Farias. The Federal Police and Congress began an investigation soon after. Some months later, with the investigation progressing and under fire, Collor went on national television to ask for the people's support, by going out on the street and protesting against "coup" forces. On August 11, 1992, students organized by the National Student Union (União Nacional dos Estudantes – UNE), thousands of students protested on the streets against Collor. Their faces, often painted in a mixture of the colors of the flag and protest-black, lead to them being called "Caras-pintada".
On August 26, 1992, the final congressional inquiry report was released, where it was proven that Fernando Collor had personal expenses paid for by money raised by Paulo César Farias through his influence peddling scheme. Impeachment proceedings were installed in the lower house of congress on September 29, 1992. Collor was impeached, and subsequently removed from office by a vote of 441 for and 38 votes against. Fernando Collor resigned his term in office just before the Brazilian Senate was to vote for his impeachment. The senate did so anyway, suspending his political rights for eight years.
His vice-president, Itamar Franco, assumed the presidency for the remainder of Collor's term.
Franco moved away from Collor and made arrangements for a National Coalition Government including main leaders from PMDB, PFL, and PSDB. Franco appointed Fernando Henrique Cardoso as Minister of Treasury and gave him the responsibility to control inflation – the average annual inflation rate from 1990 to 1995 was 764%.
Cardoso put together a successful stabilization program, Plano Real, that brought inflation to 6% annually. Franco's approval ratings rose and he supported Cardoso to succeed him.
In the October 3, 1994 presidential elections, Fernando Henrique Cardoso, was elected with 54% of the votes.
Read more about this topic: History Of Brazil Since 1985