Canadian Manufacturing

Brazil to invest $66B in roads, railways in effort to stimulate economy

Includes laying 10,000-kilometres of train tracks, building or widening 7,500-kilometres of highway

BRASILIA, Brazil—Brazilian President Dilma Rousseff announced a nearly $66-billion investment package to beef up the nation’s ailing road and rail systems, part of efforts to solve serious transportation bottlenecks and spur a sputtering economy.

The investment includes laying 10,000-kilometres of train tracks and building or widening 7,500-kilometres of federal highways.

Rousseff said the government would soon announce other packages aimed at airports, ports and transportation on waterways.

“We’re starting an initial stage from which Brazil will emerge richer and stronger,” Dilma said at a ceremony announcing the package. “Brazil will finally have an infrastructure that’s compatible with its size.”

Brazil’s growth is slowing, but the nation has yet to feel the brunt of crises that have hit Europe and the U.S. since 2008.

With the world’s sixth biggest economy, Brazil has benefited from a rapidly expanded middle class that drives domestic consumption.

The government has also set aside $375-billion in foreign reserves, giving it further cushion against economic shocks.

The government will award private companies concessions for construction, maintenance and operation of the projects through a competitive bidding process.

The announcement comes as Brazil gears up to host the 2014 soccer World Cup and 2016 Olympics.

Transportation bottlenecks have long made it difficult to move Brazil’s massive amounts of commodities from far-flung fields and mines to foreign markets, hurting the growth of important export sectors.

Although a great hope among emerging-market nations, Brazil ranks far behind other big nations when it comes to infrastructure.

A recent global competitiveness report from the World Economic Forum ranked the country No. 104 out of 142 nations on the issue.

“Brazil still suffers from weaknesses that hinder its capacity to fulfill its tremendous competitive potential,” the report stated.

It added that the “lagging quality of its overall infrastructure” is an area of “increasing concern.”

Clesio Andrade, head of the industry group the National Transport Confederation, said it has called for at least $200-billion in new infrastructure funding.

“With these investments and those we’re expecting for ports and airports, we’ll approach that goal,” Andrade said, while forecasting Rousseff would soon announce $125-billion for other transport areas.

He praised the left-leaning administration for opening the investments up to the private sector.

“It’s important that after more than 20 years, the government has left behind ideology and opened the projects to participation by private enterprise,” Andrade said. “That gives a lot of strength to the projects and will help generate more jobs.”

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