Brazil to spend R$1,000bn on infrastructure

The Brazilian government will announce on Monday a programme of up to R$1,000bn ($550bn) in infrastructure investment in what will be widely seen as the first offensive in the battle between the main contenders in Brazil’s presidential election in October.

Known as the PAC II – the Portuguese acronym for accelerated growth programme, part two – the programme will lay out spending plans for 2011 to 2014, the period of the next government beginning on January 1 next year.

The programme includes public and private investment, including public-sector companies and the federal, state and municipal branches of government.

In spite of widely-publicised delays to the first PAC – it foresaw investments of R$504bn between 2007 and 2010 but more than half of its projects have yet to begin – the PAC II will provide a boost to the election campaign of Dilma Rousseff, chief minister to President Luiz Inácio Lula da Silva and his chosen successor.

Mr Lula da Silva named Ms Rousseff “mother of the PAC”. She will step down from her ministerial post this week as required by Brazilian law to allow her to stand in October.

Campaigning does not begin officially until July and candidates are not allowed to campaign before then. But the PAC II will inevitably form part of Ms Rousseff’s campaign programme and will be closely associated with her by voters. Launching the PAC II will be her last big public act before stepping down.

Ms Rousseff’s main opponent in October will be José Serra, governor of São Paulo and a leading member of the centrist opposition PSDB. He has frustrated party leaders by refusing to announce his candidacy before next month, although he admitted in a newspaper interview last week that he would run.

Mr Serra, a successful former health minister, is better known as a political figure than Ms Rousseff and has led opinion polls since last year. However, his lead over Ms Rousseff fell recently from about 20 points to four points last month and government supporters had expected Ms Rousseff to overtake Mr Serra in a poll published at the weekend.

However, Mr Serra’s lead increased to 9 points in the weekend poll, possibly reflecting the “pre-announcement” of his candidacy and a round of campaign-style activities including appearances at carnival celebrations across Brazil and a string of public works inaugurations.

Analysts said the weekend’s poll could precipitate a more aggressive phase to the pre-campaign. It may also be a factor in choosing Ms Rousseff’s running mate. She is supported by the catch-all PMDB, which wants its president, Michel Temer, to run as vice-presidential candidate.

Many in government are thought to favour Henrique Meirelles, governor of the central bank and also in the PMDB. Analysts say having a staunchly orthodox running mate such as Mr Meirelles would help calm nerves among investors, many of whom are worried that Ms Rousseff could take the country to the left and undermine its recent spurt of growth.