After weeks of delay, Brazilian President Luiz Inácio Lula da Silva announces today his Growth Acceleration Package (PAC), a plan that according to him will unlock Brazil's growth.
The four-year, 500 billion-reais (US$ 235 billion) program intends to push Brazil ahead at a 5% yearly growth clip, double the rate of the past 15 years.
The PAC anticipates investments of about US$ 60 billion a year in several areas including energy and fuel, housing, basic sanitation and transportation.
The whole PAC will contain 50 measures divided into three areas: tax impact for consumers, infrastructure and tax relief for businesses.
The government plans to cut taxes from businesses in order to draw capital from the private sector and reach an investment rate of 25% of the GDP, the minimum rate required for emerging economies. Today this rate is below 21%.
Another government measure will allow businesses to delay the payment of federal taxes like the worker-related INSS and PIS/Cofins contributions.
The initial plan anticipated by the General Law of Micro and Small Businesses envisioned US$ 12 billion reais (US$ 5.6 billion) in private investment. This number has already been downgraded to US$ 8 billion reais (US$ 3.8 billion) though.
After arriving from São Bernardo, in the Greater São Paulo, his political hometown, Lula met for over three hours on Sunday with eight ministers to finalize his plan before announcing it today.
"The resources will come from the federal budget, from state-owned companies and from a series of creative and administrative measures that are going to stimulate private investment," announced House representative and former minister Ciro Gomes, who is expected to be invited to a cabinet post in Lula's second term of office.
Finance Minister, Guido Mantega, who also took part in the meeting didn't want to talk about numbers, but admitted that the government would be investing over 300 billion reais (US$ 140 billion).
"This is a robust program," said Mantega, "with sound measures, measures that are going to accelerate the country's economic growth. They are measures that were well conceived, thought, matured and that will have the effect of stimulating the country's growth."
Minister of Cities, Márcio Fontes, announced that among the measures will be 5 billion reais (US$ 2.3 billion) for basic sanitation projects, an amount that has already been approved.
Not everyone is happy with the new PAC, however. Luiz Fernando Furlan, the minister of Development, Industry and Foreign Trade, for example, believes that his ministry is not getting the attention and the money he was expecting.
Furlan didn't get what he wanted to stimulate exports. He tries to find a positive spin, however: "These other measures will be taken care later on."
