Saturday, November 7, 2026
News and Views from the Global South
BRAZIL: Economy Still in Disarray
Mario Osava
- Brazil is still on a rocky road toward economic order and, while inflation apparently has been brought under control, stalled projects and continued massive waste undermines progress, according to parliamentarians.
After two decades of shifting politics and rampant inflation, a special Senate commission on unfinished projects found that nearly 4.000 projects launched by successive governments remained incomplete, uselessly devouring scarce federal resources.
The commission proposed giving priority to 80 of these in order to allocate funds from next year’s budget to ensure their completion.
Costs of stalled projects double every three years, according to the senators, who also have been investigating possible irregularities in bidding for the work and the prices paid to contractors.
In the future, only projects with a clear “beginning, middle and end” that cannot be disrupted by a change of government should be approved, concluded Casildo Maldaner, spokesman for the commission.
The hydro-electric facility at Puerto Primavera, under construction since 1980 on the Parana River, 750 kilometers from Sao Paulo, was a prime example of the waste the unfinished projects represent, he said.
According to the original plan, the enterprise was to begin supplying energy in 1985. But construction slowed in 1982 because of the recession and Brazil’s soaring foreign debt, and virtually stopped in 1985. Now there is a plan to resume work and have the plant operating within three years.
A facility of this size, with the potential to generate 1.8 million kilowatts, would take 2 billion dollars to build today. But the Puerto Primavera project has already cost 5.9 billion dollars and experts estimate it will take another 1.7 billion dollars to complete!
Billions of dollars have been spent in compensation for land and buildings that will be flooded, and for damage to neighboring cities and the environment. Maintaining the town of Primavera, built for workers at the facility, costs an annual 10 million dollars.
The enterprise overseeing the project, Centrales Electricas de Sao Paulo (CESP), has accumulated an 8.2 billion dollars debt as a result of Puerto Primavera and several other incomplete projects, and the irrational swings in the political economy. Realistically, the work cannot be completed without an infusion of private capital.
According to the senators, however, it is the roads that have suffered most from the suspension of official investment over the past decade. The aim is to allocate 500 million dollars in 1996 to complete 22 road construction, repair and expansion projects.
The senatorial commission also proposed to cut 30-40 per cent of planned projects, Maldaner explained.
The many financial found had revealed a total lack of oversight by economic agencies, he said. . Building a single kilometer of a two-lane roadway costs 1.4 million dollars in the state of Rio de Janeiro, for example, but only 710,000 dollars in the northeastern state of Pernambuco, according to figures from the Ministry of Public Works and local governments.
The disruptions of the past 20 years have left state governments on the verge of bankruptcy, with bureaucrats’ salaries exceeding, in a majority of cases, the constitutionally mandated 60 per cent budgetary limit.
This has lead provincial governors to press for administrative reform to end lifetime job security in public employment, a tradition defended by unions and that politicians are hesitant to break.
Although inflation is at its lowest level in 20 years, with a negative 1.08 per cent rate in September, prices for goods in Brazil vary considerably.
Political upheavals contributed to a 15.6 per cent drop in industrial output for August, compared with last December, after 16.5 per cent growth between June and December 1994.
Agricultural production, which reached an extraordinary 81.6 million tons of grain this year, will fall by 20 per cent next year, according to the Ministry of Agriculture.
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BRAZIL: Economy Still in Disarray
Mario Osava
- Brazil is still on a rocky road toward economic order and, while inflation apparently has been brought under control, stalled projects and continued massive waste undermines progress, according to parliamentarians.
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