Narayan AmmachchiBrazilian President Luiz Inácio Lula da Silva unveiled a plan to invest BRL 1 trillion (US$200 billion) in infrastructure, energy and transportation over the next four years.
The plan, which has been dubbed the “Growth Acceleration Pact” (PAC), aims to create jobs, boost economic growth and reduce poverty.
Under the plan, Brazil will build new highways, expand electric grids and modernize its seaports and airports. It will also build new schools and hospitals and develop renewable energy sources.
Economists have warned that spending so much money in the absence of an economic downturn could stoke inflation. President Lula (whose left-leaning proposals have often been criticized) defended the plan, saying that such an investment is necessary to create jobs.
Brazil’s unemployment rate currently stands at 8%, which is higher than its BRIC partners such as India and China. Inflation remaines a problem in Brazil, but it has been declining in recent months. The main cause of inflation in Brazil is the rising cost of food and energy in the global market.
The government plans to finance the PAC through a combination of public and private investment. The public sector will contribute around 40% of the funding, with the remaining 60% coming from private enterprise.
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