A fresh infrastructure spur

On 15 August the Rousseff administration launched a R$133bn (US$65.6bn) stimulus package to spur investment in infrastructure (and shore up ailing investor confidence). “Since last Sunday, we have been an Olympic country. We are in the countdown to the games in 2016”, Rousseff declared. In the first of a series of announcements due in the coming weeks, Rousseff said that under the ambitious national infrastructure development program known as the Growth Acceleration Plan (PAC), the government would sell public-private build-operate concessions of up to 30 years for nine highways and 12 railways, covering 7,500km of roads and 10,000km of railways. Transport Minister Paulo Passos said the aim is to double the capacity of the country's creaking road network. "Brazil's infrastructure will finally be compatible with the size of the country," Rousseff declared. Planned invest- ments under the scheme will amount to R$79.5bn (US$39.3bn) in the next five years, with the remaining R$133bn (US$65.6bn) over 25 years. Much of the funding will be offered on concessional terms through the state development bank, Bndes.  

"Partnerships with private companies are essential for continued economic development," Rousseff told a reception of business leaders, a notable statement given the ruling left-wing Partido dos Trabalhadores (PT)’s staunch opposition to the privatisation process carried out under Fernando Henrique Cardoso (1995-2002). The economist Rousseff is nothing if not pragmatic however and since taking office in January 2010, she has shown a willingness to take tough political decisions, even at the cost of support in some quarters of the ruling PT. (Former president Lula da Silva (2003-2010), famously indecisive, told (or warned) the PT when he personally selected Rousseff as his preferred successor that this was one of her strongest attributes and he has been proven right in many respects – including Rousseff ’s all-out assault on the endemic official corruption in Brazil.)  

The reality is that despite Rousseff ’s natural inclination towards an activist state, the bloated Brazilian federal government is simply incapable of delivering on its own and so Rousseff, who as minister of the presidency under Lula was the architect of the PAC — worth a staggering R$955bn (US$472bn) between 2011 and 2014 — has plumped for a public-private partnership scheme that at first glance gives the appearance of a major federal government capital investment scheme. Upon closer inspection though the private sector both finances and carries out much of the actual PAC, typically in conjunction with state and municipal authorities.  

Earlier this year, the government also awarded projects to redevelop and operate four major airports to public-private consortia in an urgent bid to speed up the preparations for the 2014 football World Cup and the subsequent Olympiad. Rousseff has signaled that additional airport concessions are also in the offing.

Latin American Weekly Report