plan failed because of management errors coupled with defensive actions by segments of society that would be most directly hurt by the plan. Confidence in the government was also eroded as a result of the liquidity freeze combined with an alienated industrial sector who had not been consulted in the plan. After falling more than 80 percent in March 1990, the CPI's monthly rate of growth began increasing again. The best that could be achieved was to stabilize the CPI at a high and slowly rising level. In January 1991, it rose by 19.9%, reaching 32% a month by July 1993. Simultaneously, political instability increased sharply, with negative impacts on the economy. The real GDP declined 4.0% in 1990, increased only 1.1% in 1991, and again declined 0.9% in 1992. President Collor de Mello was impeached in September 1992 on charges of corruption. Vice president Itamar Franco was sworn in as president (1992–94), but he had to grapple to form a stable cabinet and to gather political support. The weakness of the interim administration prevented it from tackling inflation effectively. In 1993 the economy grew again, but with inflation rates higher than 30 percent a month, the chances of a durable recovery appeared to be very slim. At the end of the year, it was widely acknowledged that without serious fiscal reform, inflation would remain high and the economy would not sustain growth. This acknowledgment and the pressure of rapidly accelerating inflation finally jolted the government into action. The president appointed a determined minister of finance, Fernando Henrique Cardoso, and a high-level team was put in place to develop a new stabilization plan. Implemented early in 1994, the plan met little public resistance because it was discussed widely and it avoided price freezes. The stabilization program, called Plano Real had three stages: the introduction of an equilibrium budget mandated by the National Congress a process of general indexation (prices, wages, taxes, contracts, and financial assets); and the introduction of a new currency, the Brazilian real (pegged to the dollar). The legally enforced balanced budget would remove expectations regarding inflationary behavior by the public sector. By allowing a realignment of relative prices, general indexation would pave the way for monetary reform. Once this realignment was achieved, the new currency would be introduced, accompanied by appropriate policies (especially the control of expenditures through high interest rates and the liberalization of trade to