President Luiz Inácio Lula da Silva on Friday launched the third iteration of the Growth Acceleration Program (PAC), a package of public investments in infrastructure that left behind an extensive history of corruption and unfinished projects.
The federal government announced that the new PAC amounts to BRL 1.7 trillion (USD 350 billion) in investments, including BRL 612 billion from the private sector and BRL 343 billion from state-owned companies.
The largest portions of the program are in housing, sanitation and flood control (BRL 610 billion), and in energy transition and security (BRL 540 billion).
The two previous editions of the PAC left a trail of unfinished projects, the largest of which is the Rio de Janeiro Petrochemical Complex (Comperj). Led by government-controlled oil company Petrobras, the construction had the stated objective of reaching a refining capacity of 330,000 barrels per day. Works cost more than USD 10 billion, but the project was abandoned about 80 percent of the way through. Unforeseen costs and engineering errors also hindered its completion.
A 2019 study sponsored by the Brazilian Chamber of the Construction Industry (CBIC) found that the PACs had left nearly 4,700 unfinished projects, representing more than BRL 135 billion in investments, of which BRL 65 billion had already been spent. The projects were halted for a variety of reasons, including problems with documentation, project management, and outstanding public procurement issues.
The speeches during today’s ceremony at Rio’s Theatro Municipal were severally politically charged. Chief of Staff Rui Costa said that former President Dilma Rousseff, who was impeached in 2016 for fiscal fraud, was the victim of a “coup” – a common talking point among left-wing hardliners. In fact, the impeachment was supported at the time by the Brazilian Socialist Party (PSB), which currently has three cabinet seats in the Lula administration.
Mr. Costa also asked business people to present “suggestions” to the government to speed up the delivery of the projects. The Lula administration recently struck a deal with automakers: a tax waiver plan for new cars was advertised by the carmakers themselves.
Sérgio Nobre, president of major union federation CUT, went on to attack the Operation Car Wash anti-corruption investigation. In his speech, he said that the “disastrous” operation had led to the closure of companies and the loss of jobs. Car Wash successfully led to the recovery of more than BRL 24 billion (USD 4.9 billion) in stolen funds, including more than BRL 6 billion from Petrobras alone.
Mr. Nobre added that an operation such as Car Wash can “never again” take place.
Lula, the last to speak, did not dispute Mr. Nobre’s remarks.
Senator Sergio Moro, who served as a judge during the Car Wash investigation, tells The Brazilian Report that he “repudiates” Mr. Nobre’s speech.
“Everyone knows that what hurts the economy is corruption, not only the embezzlement of public resources, but also crony capitalism,” Mr. Moro says. “We know the economic disaster that resulted from the Lula and Dilma [Rousseff] administrations and we are working to ensure that this does not happen again”.
“If there were job losses, it was because of the recession caused by the economic mistakes made by their governments,” Mr. Moro adds. “Operation Car Wash, by fighting corruption, sought to build a more honest and upright country and make the economy more efficient.”
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