REFORM TO GROWTH

The State began to change its role in 1995, moving from owner to regulator. This change does not mean that the State will sell all of its holdings. But the State, which owned production firms in many economic sectors, is becoming primarily a regulating and monitoring agent. This new status requires a new State structure. Creating this structure requires an educational process of changing people's views and expectations.

CONSTITUTIONAL AMENDMENT	SUMMARY	PROMULGATION
Termination of Piped Gas Monopoly	Relaxes the state government monopolies, allowing private companies to participate in distribution services	August 15, 1995
Redefinition of Brazilian Firm	With passage of the amendment, a Brazilian firm is defined as being any company established in Brazil, regardless of the source of its capital	August 15, 1995
End of the Petroleum Monopoly	The Government will be able to contract private companies for the exploration and exploitation of petroleum and natural gas deposits	November 9, 1995
Inland and Coastal Cabotage Shipping	The market reserve for national companies was ended	August 15, 1995
Liberalization of the Telecommunications Sector	Through concessions, the Government can contract private companies to operate telephone, telegraph and other communications services	August 15, 1995

The government is accelerating its preparation of draft legislation to implement the constitutional amendments that have already been approved. It is important to point out that many of the approved amendments do not require supplemental legislation. In other cases, the proposed legislation is already in Congress, such as that pertaining to cabotage shipping. For telecommunications, draft legislation is pending in the Senate. Regarding petroleum, proposals are on their way to Congress.

The thrust of all these reforms is to decentralize the Government and to reduce the State's role in the economy. This change in the State's role has been promoted not only to improve economic performance, but especially to facilitate a new social policy.

Pending Constitutional Amendments	Proposed Change
Social Security Reform	Proposes to end: a) full salary payment for retiring civil servants and b) retirement based on time of service
Tax Reform	Combines the excise tax (IPI) with the sales tax (ICMS), and alters the corporate income tax (IRPJ)
Administrative Reform	Ends tenure for civil servants, structures the salaries of the legislature and judiciary, and prohibits strikes by employees in essential services.
Reform of Executive Branch's Structure	Gives to the Executive Branch the right to determine the structure of its ministries and administrative agencies
Fiscal Stabilization Fund	Reduces budgetary transfers to local governments, making the savings available to be programmed with more flexibility