Brazil unveils huge infrastructure package to spur growth

Brazilian government unveils huge infrastructure spending package worth of $64 billion, aiming to revive country’s flagging economy

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

President Dilma Rousseff of Brazil announced an ambitious infrastructure plan on Tuesday in a bid to stoke the country’s faltering economy through investments in roads, railways, airports and harbour terminals.

The $64 billion (198.4 reais) worth plan, dubbed PIL 2, aimed to restore the world's seventh-largest and the biggest economy in Latin America, hereby to bring back Rousseff’s eroding popularity due to high inflation, rising unemployment and corruption scandals.

Rousseff has been struggling with a corruption scandal at state-run oil company Petrobras since last year when she was reelected for a second term.

Rousseff’s incumbent Workers’ Party regards the country’s huge infrastructure projects as an economic and political tool for securing Brazil’s role as regional leader in Latin America.

She said the envisaged project would be a turning point  in a "gradual and realistic" way in her second term in office of presidency.

"Today is an important day in my second term. We're here not just to announce big numbers and ambitious projects. We're here especially to renew our commitment to the development of our country," Rousseff said.  

The proposed infrastructure plan will be implemented within a calendar in which the Brazilian government has declared to spend more than one-third of the package, $22.3 billion (69.2 billion reais)  by the end of 2018 and lay out the remaining $41 billion (129.2 billion reais) starting from 2019.

"The time has come to build the basis for a new cycle of development and growth for the country," said Brazilian Planning Minister Nelson Barbosa. "Increasing the rate of investment in Brazil is fundamental," he added.

The World Economic Forum ranks Brazil as only 124th out of 144 countries in terms of quality of infrastructure, the lack of which decreases productivity and efficiency in the country’s developing market.

Brazil’s new spending package for infrastructure projects plans to invest $27.9 billion for railroads, $21.3 billion for 7,000-km highways, $12.1 billion for ports and $2.7 billion for four airports.

"There are obstacles that initially appeared insurmountable, but a nation is united and strong when it is capable of overcoming difficulties. We're here to remind ourselves that, for us, development means investment, employment, income and quality of life. It means the capacity to grow, work and produce," Rousseff said.

As being the fifth largest country in terms of land surface, Brazil seeks to ameliorate its transportation and navigation networks to carry the raw materials it delivers to the world, including iron ore, oil, coffee, sugar and soy.

In this direction, the government last month launched the Trans-Latin American railway project which will traverse the whole continent by linking Brazil's Atlantic coastline with the Pacific Ocean in Peru in order to boost commercial ties and socio-cultural interactions between Latin American peoples.

The cost of the railway is estimated about at least 10 billion dollars according to preliminary feasibility reports and that Chinese business is expected to undertake some sections of the project according to Chinese-Brazilian economic cooperation agreements signed last year.  

The envisaged train route will enable commodities and people to be transported more quickly to Latin American major ports, such as Santos in São Paulo state and Acu in Rio de Janeiro, through bypassing the Panama Canal in the north.

In parallel to its increasing demand for raw materials, China has recently increased its economic presence in Latin America and became one of the significant trade partners of the continent’s emerging economies including Brazil, Argentina and Mexico.

The trade volume between Beijing and Brasilia reached nearly 80 billion dollars by the end of 2014, which makes China the biggest commercial partner of Brazil.

China and Brazil also closely cooperate with the BRICS, the acronym for an association of five major emerging markets including Russia, India and South Africa.

Brazil’s economy seems to have been undergoing into recession after a quarter century of growth that declined to 0.1 percent last year and the government forecasts a 1.2 percent growth in 2015 despite the country had already organised the FIFA World Cup in 2014 and will organise the Olympic Games next year in Rio de Janeiro.


TRTWorld and agencies