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This blog post focuses on the two stages of Brazil’s Programa de Aceleração do Crescimento (‘Growth Acceleration Programme’, also known as ‘PAC’).  Aimed at assisting the country’s future economic progression, the PAC is essentially focused around improving Brazil’s infrastructure through a variety of means.

PAC-1 (Programa de Aceleração do Crescimento 1 / Growth Acceleration Programme One)

Commenced on 28th January 2007, the PAC-1 was built arounda four year implementation strategy, composed of five levels, in order of priority:

1) Infrastructural measures largely focused around energy (via the means of interest payment reductions as well as gas industry subsidies and tax reliefs); transportation (roads, highways, ports, airports, urban transport improvements); housing and sanitation;

2) Measures to encourage credit and financing;

3) Improved environmental regulatory frameworks to further develop the industry;

4) Tax relief, particularly aimed at the lower-income sector;

5) Fiscal measures spread over the long term.

The aim of the $R 513 billion programme was, in turn, to accelerate private investment and was allocated in the following channels:

Energia (‘Energy’) – out of a total of R$ 274.8 billion, R$ 179.0 billion was invested in oil and natural gas; R $ $ 65.9 billion in power generation; R$ 17.4 billion in renewable fuels and R$ 12.5 billion in the transportation of electricity.

Melhorias Infraestrutura Social e Urbana (‘Social Infrastructure and Urban Improvements’) – out of a total of R$ 170.8 billion, R$ 106.3 billion was invested in housing improving projects (focused mainly in lower class areas); R$ 40 billion in basic sanitation; R$ 12.7 billion in water system improvements; R$8.7 billion on the Luz Para Todos programme (‘Light for All’, which enables households in rural areas to get a free spot light per room with electricity two sockets) and R$ 3.1 billion on improving subway systems (particularly in Brazil’s larger cities such as Rio de Janeiro and São Paulo).

Transporte Logística (‘Transport Logistics’) – out of a total of R$ 58.3 billion, R$33.4 billion was invested in the country’s highways; R$ 10.6 billion in the merchant navy; R$ 7.9 billion in railways; R$ 3 billion in airports; R$ 2.7 billion in ports and R$ 700 million on public waterways.

Shortly after the introduction of the programme, a sub-project entitled PAC das Crianças (‘PAC for Children’) was also launched aimed at addressing the root causes of violence against children and adolescents. R$ 2.9 billion was allocated to renovate and construct 49 buildings to house young people in this predicament complemented by counselling, educational programmes, sporting academies, libraries, workshops and clinics. In conjunction with this, a programme was created to pass a single payment to families to bring back their abandoned children (an unfortunate consequence in the poorer parts of the country).

The source of the funding for PAC-1 largely came from both state enterprises (including a significant investment by Petrobras of R$ 148.7 billion) and the private sector as well as a proportion from fiscal and social security receipts.

The main criticism the programme has attracted has been with regards to its slow implementation: at the target completion date of March 2010, 63 percent of the funding was spent. At the time, President Lula publically stated his dissatisfaction: “I’m not happy with what we have done so far, the poor people of this country needs us to do more and the economy needs to happen.” More pressure was subsequently put on state heads and municipality governments to carry out projects efficiently within set timescales. Despite these issues, the overall impact of the PAC-1 has been viewed as a positive step for Brazil from all sections of society. Launched amidst the global economic crisis, many have cited the programme as a major contributory factor which assisted in Brazil’s excelled recovery – particularly as a result of the increased employment opportunities and company subsidies.

PAC-2 (Programa de Aceleração do Crescimento 2 / Growth Acceleration Programme Two)

In March 2010, part two of the Growth Acceleration Programme was launched with an infrastructure investment plan of R$ 958.8 billion for use between 2011 and 2014. Funded via a mix of private, state, federal and municipal investment, the allocation is as follows:

Melhores Cidades (‘Better Cities’) – with an investment of R$ 57.1 billion, the aim was to improve the quality of life in Brazil’s major cities with a focus on sanitation, urban mobility, pavement improvements and crime prevention.

Cidadania da Comunidade (‘Community Citizenship’) – an investment of R$ 23 billion aimed at augmenting the accessibility of state services in the country’s poorer areas including various health services, emergency care units, day care centres, pre-schools, sporting facilities and community police stations.

Minha Casa, Minha Vida (‘My House, My Life’) – continuing the established programme of reducing the country’s housing deficit, providing construction sector incentives and generating jobs with an investment of R$ 278.2 billion.

Água e Luz para Todos (‘Water and Light for All’) – a R$30.6 billion investment with the objective of continuing the programme of free access to lighting for poorer communities as well as the provision of improved water supply and resources.

Transporte (‘Transportation’) – an investment of $R 4.5 billion to continue the work of the PAC-1 in improving, expanding and integrating a logistical network of quality and safety of Brazil’s roads, railways, ports, waterways and airports.

Energia (‘Energy’) – with the largest investment of R$ 627.1 billion the funding is focused on continuing the country’s leading global status of producing clean and renewable sources of energy; supporting the production of oil (mainly in the country’s south east coast); electricity efficiency; shipbuilding investments and mineral research.

PAC-2 was accused of being a means of President Lula’s Workers Party to gain votes for the 2010 elections referring to the fact that the programme should not have been started when the first part was not fully completed. Worker Party government officials were quick to dismiss the programmes critics maintaining that Brazil is in need for infrastructural improvements and the main concern should be with regards to the successive effects on inflation that the various parts of the programme will cause. It has therefore become clear that the government needs to keep close eye on preventing runaway price rises in order to solidify the country’s long term growth and maximise the effects of the programme. Commentators have also stated that the Programa de Aceleração do Crescimento needs to be complemented by by both national and international private investment to ensure its maximum effects.

See detailed information about Brazil’s Growth Acceleration Programme here (English translation available).