Brazil’s infrastructure minister predicts a $ 50bn surge in investment

Brazil’s infrastructure minister predicts a boost in the development of the country’s highways, railways and airports on the back of $ 50bn investment in concession projects by the end of next year.

“Brazil is going to be a huge construction site,” Tarcísio Gomes de Freitas told the Financial Times.

“Of the planned concessions, by the end of 2022, $ 50bn has been contracted in investments for the modernization of airports, ports, highways and railways. That is, the equivalent of more than 30 years of public budget for in infrastructure, ”he said.

Investing is a uniquely bright spot for Brazil’s economy, which even before the pandemic for many years was marked by anemic growth, rising debt levels and rising unemployment. Most Latin American countries are also plagued by weak infrastructure, especially poor quality roads that increase transportation costs as well as lack of basic sanitation services for millions of the poorest Brazilians. .

The success of the concessions model – in which companies and investors seek to invest and run long -term projects – will also give impetus to the liberal economic agenda of the government and finance minister Paulo Guedes, who seeks to reduce role in the hulking state.

In a week -long marathon of auctions last month, investors poured nearly $ 10bn into several projects, including 22 airports, five ports, a rail line that connects the country’s east coast. part of agriculture and many road works. French airport group Vinci won seven of 22 airports, with Brazilian companies taking the remaining concessions.

By the end of next year, the government plans to have auctions of auctions for 100 assets.

For de Freitas as well as independent analysts, much of the success of the auctions has been offset by improvements around Brazil’s regulation and growing reliance on legal schemes.

“Brazil is in a good position to continue to attract international investors. The country is taking the right steps to attract them-fixing good projects, pre-publishing notices to foreign speech, increasing the level of legal security for projects and the proposed arbitration of contracts, ”said Rafael Vanzella, an infrastructure lawyer with Machado. Meyer Advogados.

“We are seeing improvements, and every day an additional step is being taken in this direction. Brazil has reached a significant level of maturity.”

De Freitas added that Brazil’s commitment to financial discipline – the clear call of minister Guedes in recent years – has made it more comfortable for investors to consider the country.

A trained army engineer who moved into public service more than a decade ago, de Freitas said Brazil faces an “urgent task” to change the transportation matrix and slaughter itself. the severe pollution of the truck.

“The rail segment now accounts for only 15 per cent of the national logistics distribution, while road delivery is 65 per cent. The government aims to increase rail participation to 35 per cent of the total. freight to be brought in by 2035, ”he said, pointing to the government’s flagship project to build a railroad to connect Amazon’s vast agriculture to the Amazon river veins.

“The only railroad change is estimated to cut up to 1m tonnes of Co2 from the Amazon sky each year.”

This focus on railroads made de Freitas a prominent figure in the agricultural states of Brazil and some have suggested that he may have had more political ambitions – a suggestion he refute

He was, however, a target of outrage from environmentalists, who said they had not consulted on the many infrastructure projects coming up across the country.

“The government talks directly to the business sector, but there is no dialogue with civil society,” said Tatiana Oliveira from the Institute of Socioeconomic Studies.

There is a pattern of treating the environment as an obstacle to the growth and development of the country. The environment and communities are often ignored. ”

Further reporting by Carolina Pulice

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