Government Will Contribute Only 14% to Brazil’s US$ 240 Bi Investment Package

Brazil's president Lula da Silva unveiled on January 22 an economic package with the purpose of boosting growth to 5% annually by 2008 through a combination of public and private spending.

"The challenge now is to accelerate economic growth," said Lula, who was put on the defensive during his reelection campaign last year for slow Brazilian economic expansion that lagged behind the rest of Latin America.

The plan unveiled calls for more than US$ 240 billion through 2010 to repair and build highways, boost electric power generation, expand ports and airports and provide housing and water and sewage service for needy Brazilians.

About US$ 34 billion would be provided by the government and the rest would come from the private sector. Lula da Silva's administration is also planning legislation to give business big tax breaks to participate in the projects.

Brazil will try to bring down government debt by linking increases in government salaries and the national minimum wage to the inflation rate plus no more than 1.5%.

Lula da Silva said that he expects Brazil's economy to expand 4.5% this year, and that the economic package will help boost GDP growth to 5% in 2008 through 2010.

Experts and multilateral organizations believe South America's largest economy will grow only 3.5% this year after estimated 2.8% growth in 2006.

However a pending chapter of the proposal was the private's sector demand for tax and labor law reform and interest rates.

Lula da Silva's administration imposed high interest rates during his first term that brought inflation down to less than 4% and helped eliminate the country's typical boom-and-bust economic cycles.

But the rate also contained growth by making borrowing for businesses extremely expensive and the appreciation of Brazil's currency against the US dollar has hurt sectors of the economy exporters and manufacturers for the domestic market because goods from abroad are often cheaper.

The benchmark Selic rate currently stands at 13.25% with inflation in the range of 4%.

Mercopress

Tags:

You May Also Like

A bus line in São Paulo, Brazil

Blackouts Are All Over Brazil, But No One Sees Them Unless They Touch the Rich

Every day, from morning to night, millions of Brazilians wait for public transit for ...

How Brazil Fooled the Whole World on AIDS

The World Bank’s forecast in the decade of the ’80’s about the growth in ...

Goodbye Song

American musician Stan Getz once asked Brazilian conductor Júlio Medaglia, "Why doesn’t Baden Powell ...

Brazil Accuses US of Lying to the WTO on Amount of Farm Subsidies It Grants

The price of suspending the negotiations of the Doha Round in the World Trade ...

For Lula and Brazil There’s No Salvation Outside the Left

The serious mistakes committed by the PT (Partido dos Trabalhadores – Workers Party), both ...

Brazil Congress Urges All-Hands-on-Deck Approach to Fight Child Sex

Gathered in Brazil, a United Nations-backed forum to combat the sexual exploitation of children ...

If Only Brazil Could Produce Knowledge the Way It Makes Cars!

In 2007, Brazil surpassed Spain and France in automobile production. Brazil produced 2.972 million ...

Presidents Lula and Bachelet

Brazil and Chile to Cooperate in Science, Biofuel and Education

Brazilian President, Luiz Inácio Lula da Silva, and Chilean President, Michelle Bachelet, are going ...

Brazil Congress Votes this Month on Eliminating Visas for US Tourists

Brazil’s Minister of Tourism, Walfrido dos Mares Guia, speaking at the São Paulo Industrial ...

Brazil’s Gol Goes International. First Flight: Buenos Aires

Brazil’s GOL Linhas Aéreas Inteligentes S.A., December 1st, started selling tickets to its first ...