Brazil announces investment of $66 billion to revive its economy

(Before It's News)

The plan presented by Dilma Rousseff intends to provide Brazil with highways and railways, but its success will depend on heavy investment through the BNDES. Brazilian president, Dilma Rousseff, has decided to launch a plan for major infrastructure renovation and construction across the country in an attempt to revive a plunging economy. The government’s plan will mean a preliminary investment of nearly 200,000 million reais. Dilma’s plan envisages the construction of highways, railways, airports and ports, which would be part of the type of infrastructure that Brazil has lacked for decades. In short, the plan seeks to create a dynamic transportation system that allows Brazil to cure the historical and chronic lack of roads and railways that hinders its ability to be a competitive partner, in the region and in the world. The plan is ambitious and seemingly fast arriving project. The government plans to have the highways project ready to be bid on in about a year. The construction of such highways includes 2,607 kilometers all around the country. Most of the new highways will alleviate the serious transportation problem for soybean producing states such as Mato Grosso and Mato Grosso do Sul, whose large production is taken to the port of Santos in São Paulo. About 25% of all Brazilian exports are shipped through the Santos port, which until now means a considerable reduction in competitiveness and productivity due to the difficulty that entails sending the product via crumbling roads. Dilma’s plan, however, comes with an important caveat as its success depends on private companies wanting to participate because Brazil does not plan to directly invest in the construction of any of these infrastructures. The plan is to offer special financing through the National Bank of Economic and Social Development (BNDES). Loans will be provided to start the projects, which in the case of railroads will reach up to 70% of the total costs. Companies will then benefit from the subsequent operation of these routes. Brazil’s Minister of Planning, Nelson Barbosa, emphasized that Brazil has a large and growing demand for this type of infrastructure. In the last ten years, the number of agricultural products transported by land in Brazil has increased by 130%. The number of wheeled vehicles on the roads in the last 10 years increase 180%, and the number of travelers using airplanes has also risen by 150%. “Therefore, there is demand. These are investments that have a secure future,” said Barbosa. According to the government plan, most of the investment will go to the creation of railways. The government of Dilma Rousseff is expected to spend more than 84,000 billion reais. The new railway line apparently includes 40.000 billion reais for sections of the line that will become part of the “cross-continental rail network”, the road linking the Atlantic to the Pacific that passes through Brazil and Peru. This megaproject will have Chinese participation, as announced on May 19 by Prime Minister Li Keqiang during a visit to Brasilia. Barbosa said that this work, which will include all necessary studies will help materialize an old dream for Brazil: an outlet to the Pacific Ocean without going through the Panama Canal. It will be vital for Brazilian exports of iron and soy aimed primarily at China, Brazil’s largest trading partner. The highways have an investment of nearly 66 million reais, the ports will need another 37 million and airports 8,5 million. Foreign companies will be eligible to participate in these projects and to request loans from BNDES, but “given the peculiarity of civil construction in Brazil”, those companies will have to do so through Brazilian companies. This investment package is the latest attempt launched by Dilma’s administration to try to encourage a fallen economy, which according to government forecasts will see another drop of 1.2%, the worst result in the last 25 years. Curiously, the new infrastructure plan has been released amid a flurry of fiscal adjustment measures and promises to contain public expenditure that invariably carry more setbacks. Economy Minister Joaquim Levy, the main promoter of all these fiscal measures, referred to the new infrastructure investment plan as “the bomb to return the country to growth.” President Dilma Rousseff, re-elected in January, has been criticized extensively due to the performance of the economy, with surveys showing her popularity at its lowest point. Optimists who are beginning to learn about the new project see the government’s move as a positive one because one of the first results of such projects will be an increase demand for jobs, which may be key to revive the economy as a whole. Read the rest below at the source link

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