Burying the Legal Ghosts of Brazil’s Hyperinflation
Three decades after a series of failed stabilization policies wiped out many Brazilians' savings, a legal fight over compensation appears to be nearing an end. But more than a long-awaited payday for some one million claimants, the restitution will also mark an end to Brazil's seemingly endless war on hyperinflation.
SÃO PAULO – A decades-old legal fight between consumers and financial institutions over the impact of Brazil’s economic policies of the 1980s and 1990s is nearing conclusion. In December, lawyers representing claimants presented Brazil’s Supreme Federal Court with a request to ratify a settlement reached with the banks.
If the court approves the deal, the settlement would put billions of reals into the pockets of savers. But more than a long-awaited payday for some one million claimants, the court-ordered restitution would also mark an official end to Brazil’s seemingly endless war on hyperinflation.
During the late 1980s and early 1990s, the Brazilian government struggled to stabilize the country’s economy and currency. At the height of the crisis, annual inflation reached 2,477%; at that rate, prices for food and household goods increased daily. A string of unsuccessful policies had accelerated inflation in public and private contracts, affecting wages, rents, and bank deposits. Some highly controversial measures – such as a move in 1990 to commandeer deposits – briefly halted inflation but contributed to a deep recession.