ROUSSEFF PLANS $66 BILLION IN INFRASTRUCTURE INVESTMENT
By Antonio Guerrero
In a bid to reverse Brazil's recent economic slowdown and boost competitiveness, president Dilma Rousseff in August unveiled a nearly $66 billion infrastructure investment program for roads, and is expected to announce a separate port and waterway investment plan.
Infrastructure development is also needed ahead of the 2014 FIFA soccer World Cup and 2016 Olympic Games. A Fitch report notes: "Policy announcements like these could attract private investment and signal that the government is shifting its focus from demand stimulus to measures that address some of the structural issues that inhibit Brazil's potential growth."
Brazil welcomed a record $8.42 billion in foreign direct investment in July, marking the highest July investment flow since 1995. The figure brings the FDI total from January through July to $38.41 billion (2.77% of GDP), slightly below last year's figure for the same period. The central bank predicts full-year FDI will be $50 billion in 2012.
The BNDES national development bank approved a $1.9 billion financing package for Brazil's Vale, the world's second-largest mining company, to expand its logistics operations. Funds will be used to improve Vale's rail and port facilities in the northern states of Pará and Maranhão, site of its Carajás iron ore mine. The infrastructure will be used to transport iron ore, as well as passengers, to the Ponta da Madeira port.
State-controlled bank Caixa Econômica Federal is reportedly planning to enter into the trade and agricultural financing business. It is lobbying the Treasury for a capital injection to support the move.