PAC-2 includes nearly $900 billion in investments


President Luiz Inacio da Silva on Monday unveiled an infrastructure investment package worth R$1.59 trillion, or about $878 billion, destined to become a central campaign banner for his candidate in October's presidential elections.

Issued just two days before Dilma Rousseff is due to step down as Lula's chief-of-staff to become the ruling Workers' Party presidential candidate, the PAC-2 plan involves investments of up to R$959 billion in areas such as energy, transport and housing between 2010 and 2014 and investments of R$631.6 billion from 2014 onwards.

PAC-2 investments for the period 2010 through 2014 will be divided into six major areas. They are:

  • Energy, including both electric power generation and oil and gas exploration: R$466 billion.

  • Urban renewal: R$57 billion.

  • Urban and rural social programs: R$23 billion.

  • National Housing Program (Minhas Casa, Minha Vida): R$278 billion.

  • Water, Sanitation and Electrification: R$31 billion.

  • Rail and Road Transportation: R$105 billion.

Brazil is growing robustly, but most agree that poor infrastructure is a major impediment to growth, whether it be bad roads or a cash-starved health service.

Investors are skeptical after lengthy delays and a lack of transparency about results during the first stage of the plan, which started in 2007.

Back in 2007, Rousseff announced the PAC-1 plan to implement 2,471 projects and invest BRL650 billion.

According to the minister, over 50% of the projects have been concluded and 90% are under way.

However, the government did not detail which projects have been completed and the 2009 fourth quarter balance only outlines progress in 6% of the projects.

The government forecasts overall economic growth of 5.5% per year between 2011 and 2014, which mirrors market forecasts for growth in 2010.