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Brazil Plans Huge Stimulus Package in Lead-Up to Olympics

Brazil Plans Huge Stimulus Package in Lead-Up to Olympics

After the closing ceremonies of the Olympics, attention has quickly shifted towards Brazil, which will host the 2016 Games, to be held in Rio de Janeiro. Current Brazilian president, Dilma Rousseff, has announced a gigantic stimulus plan that will privatize railways and roads, as well as lowering the price of energy and lowering some strategic energy taxes in an effort to boost growth throughout the vast country.

The measures, announced today, are meant to address gigantic structural flaws in the Brazilian system with the hope of injecting about $50 billion worth of investments over the next five years. The BBC notes that Brazil’s economy is expected to grow by only about 2% this year, a disappointing performance for a country that had a 7.5% increase in 2009.

The stimulus plan inevitably puts much of the power in private investors’ hands. Earlier this year, President Rousseff gave three of the airports to private companies in an effort to increase efficiency before the 2014 soccer World Cup and the Olympic Games of 2016.

Some economists have expressed concern that a round of tax reductions expected in the new stimulus plan could speed up inflation just as it had in the 1960s and 1970s in Brazil. Other critics fear that a heavy dependence on government intervention to control the country’s growth could end in disaster.

The newest announcement concerning the stimulus plan is only the latest in a series of efforts that have dominated Brazilian news for the whole summer. In late June, the government announced a $4 billion economic stimulus package in an attempt to boost growth. The New York Times points out that President Rousseff’s policies have kept unemployment at a low of 5.8% and have actually worked to begin restructuring transportation.

President Rousseff has been known for her tough stance on private banks. She forced some of the largest private banks in Brazil to lower their interest rates by repeatedly emphasizing the economic slow down of the entire country that was partially due to high interest rates. The banks were quick to follow the president’s suggestion after she refused to cater to their desires.

While the newest round of announcements regarding the stimulus hit the media, construction workers have been steadily chipping away at building new structures for the Olympic Games. The BBC points out that about 4,000 people have protested against the Games because their families will be ousted from their homes in order to accomodate the Olympic Park.

One thing is for sure, with both President Rousseff announcing big economic changes, and massive building in the capital, major shifts in infrastructure, transport, and appearance are on their way for this charismatic South American country. Currently, the country is the sixth biggest economy on the world stage and currently promises to continue on its path.

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Photo Credit: Jeff Belmonte

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17 comments

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1:06PM PDT on Aug 20, 2012

Not for the people I guess?

4:17AM PDT on Aug 17, 2012

Hmmmmmmm.

5:26PM PDT on Aug 16, 2012

Thanks.

5:26PM PDT on Aug 16, 2012

Thanks.

1:07PM PDT on Aug 16, 2012

hmmm

1:07PM PDT on Aug 16, 2012

hmmm

10:42AM PDT on Aug 16, 2012

What ever it takes to get the government to invest in stimulating the economy. Hire people to fix the infra structure. Hire people to build for the 21st Century. Hire people to educate the next generations. It worked in the US when Roosevelt started the CCCs. It worked for Eisenhower when he built the US interstate road systems. It'll work now.

9:03AM PDT on Aug 16, 2012

I am still seeing social, environmental, deforestation and other problems in Brazil ... but unlike the U.S., Brazil's President, Dilma Rousseff, is not controlled by bankers.

8:05AM PDT on Aug 16, 2012

Providing stimulus to privatize? Must be a Liberal.

7:47AM PDT on Aug 16, 2012

We have the same exact tin laden barrio hills in america. Check out Los Angeles.

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