Brazil’s growth acceleration plan: a renewed vision for sustainable investment

Brazil has recently unveiled its “growth acceleration” plan, committing to a colossal 1.7 trillion reais (equivalent to $347.5 billion) in investments. A distinguishing feature of this initiative is its reliance on public-private collaborations, intending to foster an ecological transition.

The programme, dubbed PAC, isn’t new to Brazil’s economic landscape. It echoes the steps taken by President Luiz Inacio Lula da Silva in 2007 during his prior term. The primary objective back then was to heighten investments across multiple sectors: energy, logistics, and both urban and social infrastructure.

The PAC’s scope broadened under the leadership of the subsequent President, Dilma Rousseff. However, it wasn’t free from criticism. Many believe it led to rampant spending, which aggravated Brazil’s fiscal crisis. Moreover, it supposedly missed its mark in delivering substantial improvements in infrastructure.

Fast-forward to today, Lula’s administration is adamant about the revamped plan’s distinctive direction. An impressive 1.3 trillion reais are projected to be allocated by 2026. As Rui Costa, Lula’s Chief of Staff, expressed during the programme’s inauguration in Rio de Janeiro, the renewed PAC intends to catalyse public-private partnerships (PPPs). Costa emphasized a two-pronged focus: fiscal and environmental responsibility, without side-lining social imperatives. He advocated for an integrated vision where social responsibility doesn’t equate to fiscal imprudence.

Breaking down the financials, the federal government is poised to invest 371 billion reais, making up 22% of the entire fund. Meanwhile, state-owned corporations like the oil behemoth Petrobras are set to contribute 343 billion reais. The private domain is slated to pool in a noteworthy 612 billion reais. However, finer details regarding the fiscal implications and the plan’s precise timeline remain undisclosed for now.

Despite the inclusion of various ventures in the oil and gas arena spearheaded by Petrobras, the overarching theme of the plan is its environmental undertone. This commitment reflects in the declaration of an “ecological transition plan.” Lula is deeply invested in rectifying the ecological missteps during Jair Bolsonaro’s far-right leadership. This period witnessed a sharp spike in deforestation in the Amazon. But Lula also faces the challenge of invigorating growth in economically lagging regions, envisioning Petrobras as a primary growth driver.

Notably, the PAC sidesteps funding the BR-319 highway’s paving that could have snaked through untouched Amazonian terrains. Environmental advocates had sounded alarms about the potential irreversible harm this project could induce.

Cementing the ecological commitment, Finance Minister Fernando Haddad unveiled features of the ecological plan. It targets the inception of a regulated carbon credit market, the release of sustainable sovereign bonds, and a revamped climate fund to mitigate emissions. Haddad’s vision encapsulates the ambition succinctly: catalysing national growth while staunching global environmental degradation.