FGV Seminar discusses solutions for infrastructure bottlenecks in Brazil

Institutional
13 November 2013

Last Monday, November 11th, the Brazilian Institute of Economics (FGV/IBRE) and Conjuntura Econômica magazine held the meeting Infrastructure in Brazil: perspectives and challenges in the areas of construction, planning, transport and logistics. The event is the third in a series of seminars sponsored by the magazine this year to address infrastructure in the country, and brought together experts, academics and representatives of the private and public sectors to discuss development actions for the sector.

On the need for investment viability in the civil construction chain and the modernization and integration of the transportation network, one of the main issues discussed was the Public Private Partnerships (PPPs) - identified as a solution for the various infrastructure bottlenecks in Brazil. The defense comes from the CEO of the Northeast region of Construtora OAS, Elmar Varjão, for whom these partnerships are essential to quickly respond to the needs that the country has in this area. In order to have a country with proper infrastructure and competitive in the world scenario, we must implement this relationship, he believes.

Varjão further acknowledges that there is still fear, both from the public and private side, over the terms of the PPPs, since the practice is relatively new in the country. Nevertheless, he believes they should be developed with quite some speed, especially before the panorama of the federal government that expects the need for an inflow of BRL 435 billion to be invested in logistics, highways, railways, ports, airports, power, oil and gas.

The specialist of the transportation sector at the Inter-American Development Bank (IDB), Karisa Ribeiro, reminds us that despite the lack of investments in the transportation infrastructure sector in Brazil, the IDB has not yet expanded its portfolio of projects for some reasons - among them the tax issue, since in order to get a loan from a bank, the borrower (the municipality or the state), must be legally able to do so.

Another reason mentioned by Karisa is the ability of the IDB in analyzing projects.  Our portfolio is very heavy. We have more requests than we can take care of, and for this reason, we prioritize those that give more return to the country, whereas topics such as urban transportation and road improvements, besides being more sustainable, have less environmental impact, resettlement, etc., explains Karisa.

The IDB has 14 projects in Brazil executed or under implementation, exclusively directed at the transport infrastructure sector. The actions correspond to 40% of the total portfolio of bank projects, equivalent to US$ 3.5 billion.  However, the bank has been facing difficulties in financing projects in Rio de Janeiro. The fact is that the state has received a lot of money from the federal government for infrastructure projects - due to the World Cup and the Olympics-, and it does not need international money. We are open to any negotiations with the city, said Karisa.

The seminar Infrastructure in Brazil: prospects, challenges in the areas of construction, planning, transport and logistics happened on the 12th floor of FGV's main offices, in Rio de Janeiro.

To learn more about the issues discussed at the seminar and access the presentations of guest speakers, please click here (in Portuguese).

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