New PAC: Lula asks to spend and criticizes austerity – 08/11/2023 – Market

President Luiz Inácio Lula da Silva (PT) launched this Friday (11) the New PAC (Growth Acceleration Program) with a speech in which he made nods to politicians from different parties, asked for more money to expand the program and spoke about the return of a business and growth-inducing State.

Total investments, considering the Federal Budget, money from state-owned companies and private resources, are estimated at BRL 1.7 trillion, with BRL 1.4 trillion until the end of Lula’s term and another BRL 300 billion after 2026.

“If you have new projects and someone is willing to help, that BRL 1.7 trillion can grow to BRL 2 trillion or more. [ministro Fernando] haddad [Fazenda]open your hand a little, there may even be a little more money for us to do more things in this country”, said Lula during the launch event of the program at the Municipal Theater in Rio de Janeiro.

“That’s exactly why we assume the moral commitment in this New PAC to resume the construction of thousands of works. Not to let the lack of management or the almost obsessive fiscal austerity interrupt by half the fairest aspirations of our population.”

The president began by reading a pre-prepared speech, with a more measured tone. At the end, he took the microphone and spoke improvised, emphasizing what he claims is the return of a business state, but not a business state.

“Businessmen should not be afraid of this. We want an inducing State, capable of promoting debate and saying where things have to be done. That mania that comes from the 1980s, from the Washington Consensus, that the State is not worth nothing, that the private initiative is worth everything. That is over. Neither the State is worth nothing nor the private initiative knows everything”, he said.

According to the president, his third term began this Friday, with the launch of the New PAC. Lula stated that it will now be up to the Civil House to launch the PAC in all states, with the presence of governors and mayors, to publicize the initiative.

The president also stated that he will travel abroad with his ministers to ask for investments, saying that he will speak with the presidents of the USA and China and also with representatives of Arab countries, for example.

“The Vice President [Geraldo] Alckmin, get ready to leave Dona Lu alone, because we’re going to travel the whole world trying to sell these projects.”

The president began his speech calling the attention of people in the audience at the Municipal Theater who booed politicians from other parties present at the event. He said that this was not an act for the PT or the government, but for Brazilian society.

The governor of Rio, Cláudio Castro (PL), was booed by part of the public present at the ceremony. There were even cries of “murderer” and “genocidal” against the governor, who has been criticized for actions by the Military Police in Rio’s favelas. At the event, Castro sat next to former president Dilma Rousseff (PT), with whom he exchanged words and smiles.

Lula also mentioned the presence of the president of the Chamber, Arthur Lira (PP-AL), who was also booed.

“Arthur Lira has been our opponent since the PT was founded. We are going to continue to be opponents”, he said, saying that the mayor was not there as a political opponent, but as president of a Branch on which the Executive depends to govern.

“It’s not Lira that needs me, I need him, when the ministers send their projects to be put to the vote”, said Lula.

Earlier, Lula had said that the government was only able to announce the new program because the National Congress also understood that it is necessary to resume the country’s growth, but without neglecting the public accounts. He mentioned the PEC (proposed amendment to the Constitution) of the Transition and the new fiscal framework.

In an interview after the launch of the New PAC, Minister Fernando Haddad (Finance) was asked about the fiscal impact of the program. He pointed out that the fiscal framework has room for public investment, but was more restrained: “The fiscal game is never won without due vigilance.”

Of the 27 governors invited by the president to the ceremony, 21 had confirmed their presence by Thursday night (10). Missing Tarcísio de Freitas (São Paulo), Jorginho Mello (Santa Catarina) and Ratinho Júnior (Paraná).

The president even asked for silence from a person in the audience who interrupted him, saying that she should wait to make her suggestions later. “Then you make a suggestion, my son. Now it’s my turn to speak. Don’t disturb me.”

He also joked with the organization of the event, saying that the president should be the first to speak during an event like this and that it was half past one in the afternoon and that his stomach was rumbling.

nine axes

The New PAC is divided into nine investment axes: digital inclusion and connectivity, health, education, social and inclusive infrastructure, sustainable and resilient cities, water for all, efficient and sustainable transport, transition and energy security, and defense.

There will be BRL 612 billion in private investments, BRL 371 billion from the Union Budget, BRL 362 billion in financing and BRL 343 billion from state-owned companies, with Petrobras projects as the flagship.

Lula also asked the BNDES (National Bank for Economic and Social Development) for more money. The president of the institution, Aloizio Mercadante, stated that Banco do Brasil and Caixa have improved their proposals and that R$ 440 billion are already guaranteed to finance the program.

The chief minister of the Civil House, Rui Costa, stated that the New PAC will have fiscal responsibility, but without neglecting the social area.

Costa associated cases of stalled works in Brazil in recent years to an alleged lack of commitment by the federal government to states after the Dilma administration.

The minister also defended the partnership with the private sector and called on businessmen to present projects. “It doesn’t mean that the State substitutes the private initiative”, said Costa. “It’s acting as a facilitator.”

According to Costa, a difference between this PAC and the previous ones is that all actions and projects that could be made possible through concessions and PPPs (public-private partnerships) will be carried out in these ways.

“This will be the priority option, so that Union resources remain for projects that do not have any feasibility of concessions or public-private partnerships, but are important for the population.”

ecological transformation

In his speech during the launch, Minister Fernando Haddad (Finance) said that the event also marks the birth of the government’s ecological transformation plan. He classified the initiative as a strategic alliance with the Minister of the Environment, Marina Silva.

Among the main measures of the plan are the creation of a regulated carbon market, the issuance of sustainable sovereign bonds, the reformulation of the climate fund and a national sustainable taxonomy.

According to the minister, the plan goes far beyond the energy transition and the replacement of fossil fuels with renewable energy. New laws and regulations will be proposed that pave the way for sustainable investments.

stopped works

To arrive at the figure for the new program, the government had to make budgetary maneuvers: it sent a request to Congress to deduct up to R$ 5 billion from this year’s fiscal target for the works program. In addition, it is now seeking a change in the framework that will give more slack to the coffers.

The PAC includes projects such as Ferrogrão (a railroad plan that crosses the Amazon), a passenger train between São Paulo and Campinas and a bridge between Brazil and Uruguay.

The initiatives will be alongside a set of already known works, which went through different governments and remain unfinished.

These paralyzed works are among the government’s priorities. The justification is to take advantage of the fact that part of the work has already been carried out and increase the chance of completing projects considered relevant.

The Minister of Transport, Renan Filho, said that he does not consider it rash to launch the PAC without the final vote on the fiscal rule in the Chamber of Deputies. The launch of the program, he said, serves as pressure for the House to complete the vote.

“This also puts, on the other hand, a very big responsibility on Congress, of clearly working against the country [se não votar arcabouço]”, I told Sheet.

Among the works already known, and which will be contemplated by the PAC, is the Abreu e Lima refinery, in Pernambuco, whose works were suspended at the time of Operation Lava Jato —in the midst of investigations into Petrobras contracts.

Another renewed project is the Angra 3 nuclear power plant. Started in the 1980s, implementation was paralyzed in that decade and resumed during the Lula government in 2009, in his second term.

The work was suspended again in 2015, after one of the contracted contractors admitted irregularities in the midst of Lava Jato investigations. At the time, the investigations led to the arrest of Eletronuclear executives.

Also in the New PAC will be the revitalization of the São Francisco River, also promised during Lula’s previous presidency. As well as the branch line between Salgueiro and the Port of Suape (PE) of Transnordestina, which has received public funds for years and is still in progress.

Among the novelties, Ferrogrão should be one of the main undertakings. The railway link that aims to transport the grain production of the Midwest through the Amazonian rivers is the target of criticism from specialists for cutting the forest in half.

In São Paulo, the government accepted the priority appointments of Tarcísio de Freitas (Republicans), Bolsonaro’s former Minister of Infrastructure. The purpose of the New PAC will be to complete the extension of Line 2-Green of the Metro and the Intercidades São Paulo-Campinas train.

The investment forecast for the new PAC lags behind what was carried out during most of the years of Dilma Rousseff’s (PT) administration – who created the program when she was still Lula’s minister, being dubbed at the time as “mother of the PAC”.

Considering data provided by the Treasury and updated by inflation, PAC investments have grown continuously since its launch in 2007 (with R$ 18.1 billion) until the peak in 2014 —the year of elections and the World Cup in Brazil (when they were used BRL 97.4 billion). It was during this period that the country began to register a deficit in public accounts.

From 2015, given the need for fiscal rebalancing in Dilma’s second term, the trajectory was reversed and values ​​began to fall continuously to the level of R$ 34.4 billion in 2019, the first year of Jair Bolsonaro’s government (PL) —management in which the Treasury series on the program was discontinued after a change in the LDO (Lei de Diretrizes Orçamentárias) prevented the identification of values. The annual average of PAC investments in the Treasury series is R$ 52.6 billion.