Cardoso's government was of neoliberal character, like most of those who led the region in the decade of the 90's. The main objective of its management was to reduce inflation to one digit, an objective that was quickly met by moving from a CPI of 22% in 1995 to one of 9.1% in 1996 and then continue to fall to reach 2.5% in 1998. Cardoso continued with the economic opening initiated by Fernando Collor de Mello. Between 1991 and 2001, the Brazilian State collected 103.3 billion dollars in the privatization of public companies, led by the telecommunications and electric power sectors. The normalization of the economy generated a boom in domestic consumption, which attracted numerous investments seduced by the magnitude of the Brazilian market. This in turn allowed to improve the fiscal collection and achieve the cleaning up of the public accounts, however, the State debt went from 14% of the GDP in 1994 to 55.5% in the year 2000, mainly due to the high rates of interest offered by the Central Bank of Brazil.
In the social sphere, unemployment remained at around 5.5% during his first term, although in the second one it went above 7% . In the educational sphere there was a cut in contributions that went beyond 20, 3% of GDP in 1995 to 8.9% in 2000. However, there was a notable improvement in terms of public health, especially when Jose Serra took over in that ministry. During his administration, generic medicines were imposed, free medicines were distributed for the fight against AIDS and health care posts were established throughout the Brazilian interior.
During these years, Brazil also played an important role in several conflicts at the regional level, sponsoring the peace agreement between Presidents Jamil Mahuad and Alberto Fujimori, ending the war between Ecuador and Peru. He also intervened in the crisis in Paraguay, which ended with the fall of President Raul Cubas and the exile of General Lino Oviedo. A year later, Brazil began to feel the effects of the monetary contraction and the high interest rates, which directly affected the level of activity. Unemployment rose and many companies had to close due to the impossibility of competing with imported products, both by policies of trade liberalization and by the overvaluation of the currency. In turn, the fiscal and external deficit had to be covered through both internal and external financing, generating a continuous increase in public debt and interest rates. The response of the monetary authorities was that the fiscal deficit would be solved by deepening the adjustments of public spending.
With the success of the economic plan, Cardoso had sufficient support to change the Constitution, enabling immediate presidential reelection. In the general elections of October 4, 1998, Cardoso again faced Luiz Inácio Lula da Silva, as he had done in 1994, winning once more.
