Brazil: Too many bumps in the roads?

Its Growth Acceleration Project targets $252 billion in energy and infrastructure projects. Critics question if its goals are realistic

By Andrew Downie | Correspondent of The Christian Science Monitor

from the May 23, 2007 edition

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RIO DE JANEIRO - It's tough getting around Brazil these days.

Go by plane, and the voyage might take days. Equipment failures and strikes or work slowdowns by air-traffic controllers have led to frequent delays over the past six months and caused havoc at airports.

Go by road, and you take your chances on the country's unpredictable highways. Many of Brazil's highways are unpaved, and the ones that are tarred are liable to open up in huge craters at any moment. On several occasions over the past few months, main roads have washed away, taking cars, buses, and trucks with them.

Go by train – well, that's hardly a serious option because there aren't really any trains.

The precarious state of Brazil's infrastructure is drawing renewed attention thanks to a multibillion-dollar government plan to help fix it. No one argues that work needs to be done. But the discussion in Brazil is whether the government's Growth Acceleration Project, or PAC in its Portuguese acronym, is enough. Many are skeptical.

"The PAC has the merit of signaling a set of priorities," said Paulo Correa, the author of a recent World Bank report on Brazil's infrastructure. "The question is whether this administration is taking advantage of the current positive economic environment to building the microfoundations for long-term growth. Unfortunately, that does not seem to be the case."

President Luiz Inàcio Lula da Silva announced the PAC in January and described it as "the most perfect development project ever done in this republic." It envisages spending approximately $252 billion over four years: $29 billion on transport, $138 billion on energy, and $85 billion on other infrastructure projects.

Of that transport spending, $4 billion will go to railways, $1.4 billion is earmarked for ports, and about $1.5 billion is for airports. The largest portion, $17 billion, will go toward building and fixing roads, and another $5.3 billion has been set aside for the merchant navy. The money is to come from both public and private investment.

The PAC targets more than 1,600 measures. The amounts earmarked are impressive and, by broad agreement, long overdue. Brazil spent only about 1 percent of its gross domestic product on infrastructure last year, according to Mr. Correa, far below the 3.5 percent it must spend simply to maintain what is already in place.

If Brazil wants to catch up with Korea, perhaps the best example of a once developing nation that has progressed quickly thanks to heavy investment in infrastructure and education, it would have to spend 9 percent of its annual GDP on new projects, Correa says. That ambitious expenditure would add at least 4 percent to the country's annual economic growth.

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