Brazil PAC 2 Spending Plans

By Amy Skalmusky, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – The growth acceleration program, or PAC (Aceleração do Crescimento), was introduced in 2007 and laid out investment plans of nearly R$504 billion (US$306 billion) until 2010 to solve many long-overdue infrastructure issues as well as prepare for the upcoming 2014 World Cup and 2016 Olympics events.  The PAC 2, released in March of last year, was a continuation of the project that promised spending of R$959 billion (US$582 billion) from 2011 to 2014.

President Dilma Rousseff was nicknamed ' The mother of PAC' by her predecessor, Luiz Inácio Lula da Silva, photo by Wilson Dias/Agência Brasil.

President Dilma Rousseff was nicknamed ' The mother of PAC' by her predecessor, Luiz Inácio Lula da Silva, photo by Wilson Dias, Agência Brasil.

The PAC counts on investment from federal, state and municipal government as well as from private and state companies to fund the projects for infrastructure, social issues and energy.  Of the planned investment R$504 billion for the first PAC program, R$67.8 billion came from the federal government and R$436.1 billion came from state and privately owned companies, according to the NGO Contas Abertas.

The initial PAC program ended in March, 2010 to mixed reviews. Numbers released by the government paint an optimistic picture, and highlight the amount spent on completed works or works in progress reached nearly 63 percent of the total amount promised.

However, other sources cite that less than 14 percent of the promised money had been invested, and few projects had been effectively finished. Excessive bureaucracy, environmental problems and stalling in the release of funds were given as the principal reasons for the project delays, according to Contas Abertas.

Noted O Globo economic columnist Míriam Leitão, pointed out that the government is “claiming” investments made individually by state governments as PAC projects as well as including private companies “intentions to invest” in the final calculations, not mentioning that these are only intentions, not concrete numbers.

Preliminary plan for investments

Preliminary plan for investments, image by PAC 2 Portal Brasil (brasil.gov.br/pac/pac-2).

Nonetheless, PAC 2 is even more ambitious than the first, promising a total of R$1.59 trillion (US$965 billion), of which R$959 billion will be invested from 2011 to 2014.

The PAC 2 investments are divided into the areas of logistics, social and urban programs and energy, which received the largest percentage.

They are then further divided into six groups, Minha Casa, Minha Vida (My House, My Life), Cidade Melhor (Better City), Comunidade Cidadã (Citizen Community), Water e Luz para Todos (Water and Light for All), Energy, and Transport.

The program Minha Casa, Minha Vida, or “My House, My Life”, which gives households with less than six times the minimum wage the chance to purchase a house at close to zero interest rate, is cited to receive investments of R$278.2 billion from 2011 to 2014.

Also on the list for R$57.1 billion is the Cidade Melhor, or “Improved City,” program which covers investments in sanitation, risk-area housing safety, and paved roads in needy communities.

Miriam Belchior, newly appointed Planning Minister

Miriam Belchior, newly appointed Planning Minister, photo by Fabio Rodrigues Pozzebom/Agência Brasil.

The Citizen Community program is marked for R$23 billion for the construction of health-care facilities (500 emergency and 8,694 regular units), day care and preschools (6,000 units), sports centers, parks and community police stations (2,883 units) within lower income areas.

The water system and “Light for All” program will be receiving R$30.6 billion. Investments include improving water supply in urban areas, construction and expansion of pipelines and treatment plants and irrigation. The Light for All program will receive R$ 5.5 billion of the total and aims to bring electricity to 495,000 homes.

On the Energy front, R$465.6 billion is to be invested from 2011 – 2014 in electricity generation and transmission, petroleum and natural gas, the maritime industry, renewable fuels, energy efficiency and mineral research.

The Transport sector is set to receive investments of R$104.5 billion from 2011 – 2014.  The monies will be used to consolidate and expand the logistics network and interconnect highways, waterways and railroads.

Though the PAC program may have had mixed results, there is no doubt that it helped Dilma Rouseff, nicknamed “the mother of PAC” by her predecessor, Luiz Inácio Lula da Silva, into the presidency.

Now the responsibility of the Ministry of Planning, the progress of PAC 2 will still have a direct effect on not only Ms. Rouseff’s image within Brazil, but the country’s image around the world as it hosts two of its largest sporting events.

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