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Brazil looking into privatization to boost its economy

in International Business

Brazil looking into privatization to boost its economy

Brazil is set to launch the first part of its major plans to help boost the disappointing growth levels.

The plan involves privatization of roads, railways, port and perhaps other airports to improve the country’s much-criticized infrastructure.

President Dilma Rousseff will launch the new strategy personally. She has invited 50 leading Brazilian businessmen to the capital Brasilia.

Brazil enjoyed a fast growing economy in 2011, which lead it to become the sixth largest economy. The measures at the time included fueling credit growth and rising income among poor Brazilians, in a bid to raise levels of domestic consumption. However, the government failed to maintain high growth rates.

The current sluggish growth rate, which is the weakest annual performance since 2009, is mainly due to rising debt rates among the population and global downturn, which reduced demand for Brazilian products.

The government now has its eyes on privatization of major parts of the private sector that could inject up to USD 50bn in investments in five years.

President Rousseff is also considering to lower the price of energy for industry with the abolition of some federal taxes, which could cut the price by 10%.

According to economist, Silvia Matos, the new package will tackle some key economic problems, but says Brazil faces other serious issues such as increased public spending and inefficient tax system, due to which the country’s economy will remain vulnerable.

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