The PAC Man

When I think of Brazil, coffee, tropical fruits, and sugarcane come to mind. This is not only because I enjoy all three things, but also because Brazil leads the world in production of these goods.  Over the years, exporting these goods has been a key factor in generating growth for Brazil’s economy. Speaking of economic growth, President Luiz Inacio Lula da Silva, has been working towards poverty alleviation and economic growth for the past several years. In 2007, the Growth Acceleration Program (PAC), an infrastructure development program meant to improve the country’s energy supply, road, rail, and other infrastructure needs, was established.
 
Now, a few years later, President Lula is proposing PAC 2, an $886 billion infrastructure investment plan to begin in 2011 and continue through 2014. This plan is currently unapproved, but if Cabinet Chief Dilma Rousseff wins the October presidential election, the second Growth Acceleration Program will be put into effect. The Brazilian government has high hopes for this program, expecting it to expand Latin America’s biggest economy by an average 5.5 percent per year through 2014.

Between 2011 and 2014, about $534 billion in public and private investments will be essential, and the remaining $352 billion required after 2014. That is a lot of money!  I’m sure you want to know where it is going, and how it will help, right? Well, the benefits of PAC 2 are that roughly $122 billion will be put towards public investments, which may further tax cuts for purchases of appliances and cars.

Furthermore, $155 billion will be used to build 2 million homes for people with a low income.  Transportation infrastructure, like ports and roads, will receive roughly $59 billion to make necessary improvements.  Lastly, $26 billion will be used to construct railroads and three new high-speed trains connecting Sao Paulo, Curitiba and Belo Horizonte.  This should increase trade, improve business, and stimulate the economy.

That was quite a breakdown, but it is good to be aware of where and how these public and private investments will be utilized. The PAC 2 plan appears to strive towards President Lula’s goals of poverty alleviation and economic growth. Not only will jobs will be created because of the new buildings and improvements, but those with a lower income will get more support as well.