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Brazil infra study rekindles debate on public investments

Bnamericas Published: Thursday, June 23, 2022
Brazil infra study rekindles debate on public investments

Annual infrastructure investment in Brazil should increase by around 210bn reais (US$41bn) through 2046 to eliminate bottlenecks, according to a study by industries association CNI.

The study found some 344bn reais per year are necessary to improve infrastructure quality, fueling the debate on increasing public investments. Current investments total around 135bn reais per year.

CNI underscored that the fiscal crisis has compromised public investment capacity, however. 

Investments by state-owned companies, states and the federal government have fallen consecutively since 2010 and currently correspond to less than 0.5% of GDP. 

This drop has been cushioned by the expansion of concession and privatization programs, facilitating private investments, which are accounting for 70% of annual investments.

“We need to find a balance to have both public and private sector investments. No major country in the world grows only with public investment or only with private sector investment,” Bernardo Figueredo, an infrastructure consultant and former head of land transport regulator ANTT, told BNamericas. 

Proponents of more public investments are becoming more influential, pushing for the elimination of infrastructure spending caps, while private sector players are advocating new financing mechanisms to provide more room for companies to assume projects. 

"In Brazil we need to develop more financing modalities for infrastructure, such as the non-recourse project finance model. I'm advocating for this as a structural measure for the sector, to attract more companies to the country's infrastructure," Marco Antônio Cauduro, the CEO of infrastructure group CCR, told BNamericas.  

CCR is among the most active concessionaires, focusing on highways and airports. 

Recent federal auctions attracted only mild interest, however, as big players already have strong project pipelines. 

Meanwhile, development bank BNDES is seeking to boost the non-recourse project finance model, which it considers essential to provide financial flexibility for firms.

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