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In Latin America, and particularly Brazil, inequality and social exclusion continue to plague the quality of democracy despite two decades of transition and consolidation. Still, in Brazil, the Workers’ Party has been remarkably successful over the past decade, explicitly addressing the problem of social exclusion and ‘incomplete citizenship‘. This paper provides an analysis of the case of Porto Alegre covering the four Workers’ Party municipal administrations from 1989 to the present in order to assess the significance of social incorporation and citizenship for the quality of democracy in Brazil. The paper discusses some conceptual notions that are relevant for the question of democracy in Brazil, particularly the role of citizenship and civil society in ‘deepening’ democracy. Then the paper goes into the evolution and dynamics of Porto Alegre's system of ‘participatory budgeting’. The paper's assessment of this experience with respect to its performance, depth and robustness shows that ‘participatory budgeting’ has had positive effects with respect to the provision of public goods services, the quality of governance, and citizens’ participation in what is seen as a new ‘public space’ shared by the local state and grass roots organisations. The paper concludes by relating the case experience to the question of citizenship, civil society and democracy and by reflecting upon its wider implications for the current and future quality of democracy in Brazil. [ABSTRACT FROM AUTHOR]