Although the government still is on the hook for $100 billion in external debt, the amount is less than half what it was in 1999 and is bound to become smaller thanks to $250 billion in federal reserves, a cash hoard built from taxes on the country's booming export business and its internal consumer revolution. "Brazil has diversified its exports from primarily U.S. and European buyers to buyers in China, India and other emerging economies less affected by the global economic crisis," explains Leo Lima, managing director and head of JP Morgan Brazil.

Last year, 25% of Brazil's exports ended up in China, from soybeans, coffee and sugar cane to a variety of metals for infrastructure projects. The robust export trade is complemented by higher consumption of goods and services within Brazil, a country of 190 million people. "More exports and local sales add up to more tax reserves to pay down the national debt, not to mention build infrastructure in advance of the World Cup and the Olympics," Lima says.

When it comes to locations for international expansion, Brazil was ranked just behind China and India by executives from U.S. midsize companies ($20 million to $5 billion in annual sales) responding to a 2009 survey from HSBC Bank USA, one of the major banks in the region. And that's just U.S. companies. Foreign multinationals like Lanxess, a German specialty chemicals manufacturer spun off by Bayer Group in 2005, are also taking advantage of the booming Brazilian economy. "We consider Brazil one of our most important markets," says Marcio Catistti, CFO of Lanxess Brazil. "Since we established a presence here in 2004 with all 13 of our business units, our sales have increased 11% a year."

Four years later, business was so bullish that Lanxess acquired Brazilian synthetic rubber giant Petroflex, a company that complements its product portfolio and improves its position in the Brazilian marketplace. "Growing consumption and the positive economic climate in Brazil present an ideal framework for pursuing our strategy," Catistti adds. "We're here for the long term."

Modine Manufacturing Co., which provides thermal technology solutions for automotive and commercial equipment manufacturers, is another company that has benefited from a Brazilian presence. The company entered the Brazilian market in 1999 through a joint venture to service customers like Navistar, Caterpillar and General Motors that had planted flags in the country. Business was so good that in 2007 Modine bought out its joint venture partner, a local Brazilian supplier.

"Brazil has been one of our best markets in this terrible downturn," says Tim Rintelman, director of treasury operations and risk at Racine, Wis.-based Modine.

The country's phoenix-like rise from the economic crisis of 1998-99 to become a huge and growing market for goods and services is complemented by one of the world's most modern and efficient banking systems. One of Lanxess' most important partners in the country, for instance, is Deutsche Bank. Other large banks with a growing presence in Brazil include Citibank, HSBC, and Spain's Banco Santander. These financial institutions complement Brazilian banks like Banco de Brasil, Bradesco and Itau, all much larger now following years of industry consolidation.

"We are witnessing lots of expansion and opportunity for corporations in Brazil," says Burkhard Ziegenhorn, Brazil head of global transaction banking at Deutsche Bank.

In the 1970s, Brazil's largest banks interlinked their far-flung branches and integrated their clearing zones to permit check clearing on an overnight basis across the country, according to Susan Hillman, partner at Treasury Alliance Group, a consulting firm. "The irony of the financial crisis and hyperinflation was that it made Brazil's banks and bankers more sophisticated," says Hillman. "We used to say that if you wanted a really good treasury manager, make sure he or she was Brazilian."

She notes that Brazil led the rest of the world in electronic banking transactions, pioneering such interactions decades ago. Information technology continues to define the country's banking system. Indeed, the companies that make up the financial system, including banks, private pension, insurance, and finance and brokerage firms account for 20% of the total IT spending in Brazil, according to IDC. In 2008, the segment was responsible for 42.8% of the total investment in servers (including mainframes) and 29.3% of the investment in data storage.

The newest bank on the block to offer treasury management services is JP Morgan, which has had a presence in the country since 1966 and is Modine's banking partner. "We're here because companies like Ford, Volkswagen and General Motors had their best year ever in history in Brazil," says Lima. "Last year, more VW trucks were sold in Brazil than were sold in Germany."

For the first time, many Brazilians have the wherewithal to buy cars, not to mention appliances, thanks to recent reductions in taxes and interest rates. The more attractive lending environment is luring people to finance computers, televisions–you name it. "In the last decade, some 20 million people have risen from poverty to have real buying power," Lima says. "And they are not holding back."

Larry Harding, founder and president of global advisory firm High Street Partners, agrees. "The young in Brazil are literally exploding with purchasing power," he says. "If you look at the demographics, everybody is getting old in Japan but they're young and increasingly wealthier in China and Brazil."

That growing affluence, combined with a new government loan program, has Brazilians buying homes faster than they can be built. A federal government program called Minha Casa, Minha Vida (My Home, My Life) subsidizes up to 23,000 reais ($12,538 U.S.) toward the purchase of a home in poorer regions, like the state of Ceara. Families earning up to 4,200 reais a month ($2,290 U.S.) can now buy a house at an interest rate close to zero.

The ability to finance homes over a long period of time is helping families move out of poorer neighborhoods and into the lower middle class.

The new homeowners also can benefit from tax cuts for building materials, and splurge what's left of their money on cars and household goods, now that the value-added tax on these items has been reduced. The more they buy, the bigger the Brazilian economy. Deutsche Bank economists project Brazil's economy will grow about 5% this year.

John Herrick has witnessed Brazil's economic turnaround firsthand, having spent most of his treasury career covering Latin America for Seagram's, PepsiCo and Colgate-Palmolive, the latter for 16 years. "Back in the 1980s, Brazil was beset by hyperinflation and bound by tight regulations and close controls over the currency and capital markets, which hindered money flowing in and out of the country," Herrick says. "The biggest challenge was if you had cash, how you could preserve the U.S. dollar value, given the hyperinflation. That wasn't easy. You also had to look for other ways to borrow because local currency borrowings were horrendously expensive."

Today, it's a different ball game entirely. "Inflation has come down to manageable levels of 4% to 5%, and the government has really opened up to the point where they are nearly poised to let their currency flow freely–to become, in effect, a hard currency," Herrick says. "You don't have to worry about protecting the U.S. dollar value, since the currency is far more stable. It's more like a normal situation. Things are basically getting more 'first world.'"

One possible glitch is the fact that Brazil's president, Luiz Inacio Lula da Silva, is in the final year of his second four-year term, with his successor to be elected this fall. "When it comes to Latin America, any change in who holds the reins of political power is always a cause for anxiety," says Herrick, now a principal with consultancy Treasury Strategies. "In the short term, there will be uncertainty about Brazil's future."

He notes that while da Silva would like to hand over power to one of his ministers, Dilma Rousseff, opinion polls show her trailing Jose Serra, the governor of Sao Paulo, Brazil's largest state. "Serra has been a close ally of former President Cardoso, whose reforms have been responsible for much of Brazil's current economic growth and stability," Herrick says, predicting that Serra "would move Brazil further right to achieve higher GDP growth and continued fiscal consolidation." The outlook will become clearer when election campaigning starts in August, he says.

As Brazil leaves the Third World behind, the country still has a distance to go before it joins the developed nations. Harding notes that it remains "fiendishly complicated" to stay abreast of compliance issues like taxes, "which have so many names and acronyms they're impossible to keep straight.

"It also remains harder than many other places to get funds out and to repatriate earnings," he says. "You have to jump through hoops from a legal entity perspective."

Herrick concurs. "There are all these taxes when you sweep money from one account to another owned by the same legal entity, which is a pain in the neck," he says. "You pay the tax on transferring the money and then pay another tax when you move the money back. It makes modern cash management inefficient. They need to get rid of stuff like that, and they are indeed moving in that direction."

JP Morgan's expansion of its presence in the country, offering treasury management solutions to multinational clients, is part of this new direction. The bank has created a single, secure point of access for treasurers to a wide range of services to help them manage the treasury environment via the Internet. "We'll be able to meet the cash management needs of companies in Brazil, as well as multinationals wanting to do business in the region, by providing local capabilities and regional expertise," Lima explains.

Other financial institutions like Citibank, which has had a presence in Brazil since 1915, and Deutsche Bank, which will celebrate 100 years in the country in 2011, also serve multinationals with an array of product capabilities. Citi, for example, provides Web portals to support its clients' receivables processes, and recently unveiled an authorized direct debit solution that allows them to receive payments electronically. Deutsche Bank, meanwhile, offers Internet banking in 39 different languages, including, Ziegenhorn is quick to point out, "two different Chinese character versions."

The import is clear–when it comes to growth potential for multinational corporations, Brazil and China are inextricably linked. Just as the world peeked at the modern China during the 2008 Olympics in Beijing, they will marvel at the new Brazil at the 2016 Olympics in Sao Paolo. Economically, though, Carnaval has already begun.