PAC investment lags behind as government pays off old debts

Monday, April 4, 2011

Brazil's federal government spent much more on paying off old debts than funding new projects under its growth acceleration plan (PAC) during the first quarter of this year, according to a report by news service Agência Estado.

Of the 40.1bn reais (US$24.9bn) allocated for PAC project payments in 2011, only 54.5mn reais (0.1%) were spent during Q1. In the same period, the government paid off 5.4bn reais in outstanding debt left over from the administration of former president Luiz Inácio Lula da Silva.

During 2009, when PAC spending was expected to have been at its highest point, only 75.5% of planned payments were made, according to a study carried out by opposition party PSDB. Spending for 2010 is expected to be higher, the report said.

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President Dilma Rousseff, who took office in January, inherited 57.1bn reais in debt from the previous administration for pending payments on PAC investments.