Brazil seeks to invest more in airports, energy and road networks in Madrid | Atalayar

A period of predictable political and economic change in a country that is, but probably will no longer be, Jair Bolsonaro’s country. Brazil is preparing to increase state participation in the region’s largest economy, end privatizations planned by the current president, remove cap rules that limit the increase in public spending to inflation, restore public investment in infrastructure, and provide incentives for private participation.

Investors are already scrutinizing Lula da Silva’s economic plan on hopes that the PT leader and former president, who has a solid lead in the polls over Bolsonaro, will move to the left in Brazil from Peru, Chile and Colombia. But there are fewer fears: we do not expect drastic changes, and Lula will be an “old acquaintance”.

Jair Bolsonaro, President of Brazil
Jair Bolsonaro

Although Bolsonaro recently narrowed his poll lead against Lula after Congress approved a social aid package, he is still far behind his main challenger, who he will face on October 2. Bolsonaro of the PL (right), who is running for re-election, won 31% of the vote in the polls, compared to 45% for Lula of the Workers’ Party (PT). Trailing far behind are FDT’s Ciro Gómez (centre-left) with 6%, Simone Tebet (MDB, conservative) and André Iannones (Avante), both with 2%, according to the Quaest poll, which predicts that in the event of a runoff for Lula would win (53%) Bolsonaro (34%).

Lula’s economic plan advocates greater state involvement in the economy and opposes the government’s current plans to privatize companies such as electricity company Eletrobras, Correios and oil companies Petrobras and PPSA. While Bolsonaro accelerated the sale of Petrobras’ non-core assets, PT says the state-owned company “will once again become an integrated company that invests in exploration and production but also operates in the environmental transition.” Also, unlike Bolsonaro, he will strengthen state banks (Banco do Brasil, CEF, BNDES, BNB, Finep) to stimulate economic and social development.

Petrobras
Petrobras

Lula is not Peter

On energy, however, Lula does not go as far as Petro in Colombia and favors a realistic approach. For the former president, the “anti-oil front” proposed by Petro is unfeasible for Brazil and the world. “In the case of Brazil and the world, this is unreal. Oil is still needed for some time,” said Lula, for whom Brazil cannot stop crude oil exploration and production until there is no other way. However, he advocates creating a long-term plan to reduce oil consumption as alternatives are developed. Lula’s PT wants to lift the spending cap, which limits its increase to inflation, to target increased public investment in infrastructure. The aim is to ensure the modernization and expansion of transport infrastructure and social and urban logistics through a strong program of public investment, which is considered essential for growth. It should also encourage the participation of the private sector. “Private investment will also be fundamental to Brazil’s reconstruction and will be encouraged,” the document says.

Latin American “Euro”

Experts believe that infrastructure concessions will continue even after the elections. Lula, who plans to boost mining through environmental commitments, is in dialogue with employers and there is every reason to believe that he will continue this cooperation if he wins. Outside the borders, Lula’s brightest idea is to create a single Latin American currency “to avoid dependence on the dollar”; a model similar to the euro, aimed at strengthening regional integration and monetary independence of the region.

Although Bolsonaro claims to see recovery, the situation is not rosy. The OECD expects the economy to slow “significantly” in 2022 to 0.6% growth due to high inflation and rising rates, but to improve to 1.2% in 2023. The OECD is more pessimistic than Brasilia and the Central Bank, which forecast 1.5% and 1.7% in 2022 after +4.6% in 2021, the highest in 11 years, and a historic drop in 2020 due to COVID ( -3.9%). According to the OECD, inflation (12% per year) due to the war in Ukraine and rising interest rates (12.75%) are undermining purchasing power, to which should be added “uncertainty” due to the election. In June, inflation was 11.89% in annual terms.

Spain is the second foreign investor in Brazil with a total of 48 billion euros, the fourth destination in the world for Spanish investments. The economy is very important to Spain, present in all sectors, especially in telecommunications, finance, infrastructure, industry, energy, trade and tourism in Brazil, where more than 500 companies operate, including many of those that make up the Ibex-35 index.

Aina
Aina

Ein and Achion

Brazil is a particularly important market in terms of turnover and revenues for Santander, Iberdrola, Naturgy, Telefónica and Mapfre, but it is also important for Repsol, Acciona, Ferrovial, Dia, ACS, Aena, Sacyr, Redeia and Globalia. Most had already worked there when the left was in power: the PT ruled from 2003 to mid-2016. Lula was president for the first eight years, while Rousseff was president from 2011 to August 2016. A few days ago, Brazilian Infrastructure Minister Marcelo Sampaio Cunha Filho said in Madrid that the privatization of Electrobras was irreversible because it was a “win-win.” “, despite Lula’s desire to reverse the process. The minister, who defended privatization, held meetings with Aena on the seventh tender for 15 airports (including Congonhas) to be held in August; with Acciona (on the road sector) and with other companies. Aena has already manages airports in northeastern Brazil, and the minister assured that Spanish companies are “very well suited” to tenders in the country.The airport concession will last for 35 years.

Acciona
Acciona

Sampaio noted that Brasilia received €33,000 million worth of investment requests over the past six months; he looked at business opportunities, such as those related to lithium, and hinted at Spain’s importance in the energy sector, noting Iberdrola and Repsol in particular. A market where other companies in the renewable energy sector such as Elecnor, Enertis and Ingeteam are also developing.