PAC: Growth Program Boosts in 2010

By Karen Shishiptorova, Contributing Reporter

RIO DE JANEIRO – The Programa de Aceleração do Crescimento (PAC), or Growth Acceleration Program, was launched in Brazil in January, 2007 by president Luiz Inácio Lula da Silva. During the 2006 president elections, a few of the candidates cited Brazil´s need to grow as a major issue. Lula has made the campaign platform a reality.

The PAC is a program with a total budget of R$503 Billion focused on infrastructure improvements such as sanitation, energy, public water resources, transportation, logistics, energy and housing, throughout the entire country. Among other measures, it also provides tax exemptions, incentives and long term fiscal measures to boost foreign investments in Brazil. The semiconductors, microcomputers, digital TV equipment, input and services required for infrastructure and steel industry are some of the areas that benefit from tax advantages, to the tune of a R$6.6 Billion waiver.

Helmed by Ms. Dilma Housseff, Chief of Staff, the seventh and latest PAC press report presented last June 3, accounts that of the 2,446 program actions being monitored, 14 percent were concluded and 77 percent are underway as planned. This means that there are 335 concluded projects, of which 133 are logistics related, 186 within energy and 16 within social and urban improvements.

According to the report, seven percent of the projects still demand special attention, while two percent are in a critical state. The numbers do not include housing and sanitation which are tracked separately. Ms. Rousseff recently stated an increase in the program’s pace until 2010, however she denied any underlying electoral intentions.

As planned, the Brazilian growth program has been attracting international interest. Ms. Michelle Bachelet, President of Chile, was briefed about the endeavor during a meeting with Ms. Rousseff while visiting Brazil last week. Spain’s Foreign Affairs Chief Miguel Ángel Moratinos also expressed his interest in taking advantage of the program’s opportunities, especially in regards to the Rio-São Paulo bullet train project – budgeted at R$36.6 Billion – scheduled to be tendered before year´s end.

The train will connect Rio to São Paulo in 94 minutes, greatly cutting the current five hour drive. With an estimated budget of U$260 Billion, Morantinos wants to get Spanish companies involved in the projects. China has also expressed interest in an eventual partnership.

The program has also included sub-PACs. On October 11, 2007, a day before Children´s Day in Brazil, a Children’s PAC was launched to fight violence against kids and teenagers with a predicted budget of R$2,9 Billion until 2010. It includes projects for minors detained at juvenile correctional facilities due to violent acts, as well as the remodeling and construction of 49 facilities. Among other measures, it included the creation of a national adoption database.

On August 28, the Culture Department will launch the Programa de Aceleração do Crescimento das Cidades Históricas, a PAC for Historical Cities. It should inject R$150 Million annually into 124 historical cities, for urban planning and infrastructure improvements, restoration of monuments, cultural asset promotion, and financing to recover private real estate buildings of cultural significance. Among the cities proposed are the 27 state capitals, counties of the Discovery Coast (Costa do Descobrimento), Chapada Diamantina, Minas Gerais and Goiás, including additional locations protected by Instituto do Patrimônio Histórico e Artístico Nacional (Iphan – National Historic and Artistic Heritage Office in Brazil).

“It is an initiative never seen before, both for creating well established goals for urban policy and for the potential boost on the cities´ economies,” said the Department of Culture head, Mr. Juca Ferreira.

Lula recently announced a new PAC for February 2010, for Brazil´s next president. Details have not yet been disclosed to the press.