Nearshore Americas

Brazil Unveils Plans to Stimulate Economy with $66 Billion Spend on Infrastructure

Brazil has set aside 133 billion real (US$ 66.5 billion) to build infrastructure projects as part of the country’s plans to turn around the economy and attract foreign direct investments.

The stimulus package unveiled Wednesday is designed to boost the flagging economy, which has slowed down to 2 percent this year from 7.5% rise in 2010.

The money allocated will be used for building 10,000 km railways and 7,500 km roads over the next 25 years. But out of the $66 Billon, more than half of the amount is likely to be used in the coming five years period.

The stimulus package is the major decision by President Dilma Rousseff, who has recently cut interest rates and taxes on certain goods. The country has even plans to cut federal taxes on energy usage.

The Latin American country is going to involve private companies on its way to expand roads and railway networks.

“We are entering a stage where Brazil will become richer and stronger, more modern and more competitive – a stage that will ensure that the Brazilian economy will have enough capacity to attend to our population’s needs,” said President Rousseff upon unveiling the package.

Once built, the roads and railways are likely to cut the transport-related cost by several times and encourage the private businesses to expand their operation.

This is the first phase of stimulus program and more such programs are likely to be announced in the days ahead. The President said there were also plans to investment in ports, airports and waterways in the near future.

Under the program, roads will be widened and new railroads will be built connecting different cities across the nation.

According to Minister Passos, investments in roadways will have to be made in the first five years and tolls may only start to be charged after 10 percent of construction has been concluded. The winning bid will be based on the lowest toll charge offered.

Before launching the program, the federal government will create the Logistics Planning Company (EPL), which will study logistics, plan investments, design projects and make it attractive for private investors to work together with the government.

Such a stimulus, according to investors, was long overdue in a country that is billed as the fastest growing economy in the region.

Brazil has already tested several measures to stimulate economy. For an instance, it has recently devalued its currency, the real, to make its goods competitive elsewhere.

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Brazil’s economy has indeed grown over the years with increased credit and consumer spending but a stimulus was indeed overdue to boost the economy further, say analysts.

The latest announcement is anyway a major boost to Brazil, which is hosting Olympics in 2016.



Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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