By Miriam Leitao.
The Brazilian government needs to invest more. A recent article from OGlobo shows that the three ministries responsible for infrastructure projects (Transport, Integration and Cities) have so far invested only 14.9% of their R$33 billion budget. In the same period last year, they had invested 24%.
The government keeps wondering why the economy is doing so bad. Well, it’s weak for several reasons, but specially because the whole world is in crisis, which has been undermining business confidence and private investment.
But instead of inventing minor stimulus packages here and there, which actually work as red-tape for specific sectors, the government must execute the public investment allowed in the budget, which is already low. These limited resources have to be used, period.
In other words, the government is not investing even what it can invest. And the 14.9% rate may be even lower because they include accounts payable (from past bills).
If the government invests more, it will inject more spirit in the economy and “unlock” private investment. This way, businesses will feel compelled to execute their plans of expanding their factories. When the government invests, it produces economic activity and induces the private sector to do the same.
In summary, this is much more important than the minor “stimulus packages” announced every week.
Source: O Globo