May 10, 2017 / 12:19 PM / 4 months ago

Brazil readies $18.5 billion public spending plan: newspaper

FILE PHOTO: General view of a construction site of the railroad Transnordestina in the city of Salgueiro, Pernambuco state, northeast of Brazil, October 26, 2016. REUTERS/Ueslei Marcelino

SAO PAULO (Reuters) - Brazil plans to invest 59 billion reais ($18.50 billion) in public funds by the end of 2018 to accelerate the economic recovery and bolster aging infrastructure, newspaper Valor Econômico said on Wednesday.

More than a third of that, or 22.7 billion reais, would fund transportation projects, such as highways, railroads and airports, the report added, citing documents presented to ministers on Tuesday. The remaining funds would be distributed among three areas: housing, sewage and urban transit; defense; and health, education, water projects, tourism and sports.

President Michel Temer’s administration will propose the “Avançar,” or “Advance,” program to replace an ongoing plan known as PAC, Valor reported.

Representatives for the finance and planning ministries were not immediately available to comment.

Temer’s predecessor, Dilma Rousseff, introduced the PAC, or growth acceleration program, as her flagship policy in 2007 when she was chief of staff under leftist President Luiz Inácio Lula da Silva.

Economists have said the program had little effect on growth and weighed on public finances as Brazil’s economy, Latin America’s largest, slipped into its deepest recession in decades. Rousseff and center-right Temer have slashed PAC’s budget repeatedly in recent years to try to curb ballooning public debt and regain investors’ trust.

Increased public spending could make it harder for the government to plug a growing budget gap. It could also force additional austerity elsewhere at a time when the economy shows timid signs of recovery.

Temer has pursued a plan to streamline the country’s pension system to cut social security spending for years to come, triggering strong opposition. His infrastructure efforts have so far focused on privatization, with a successful airport auction in March demonstrating investors’ interest in Brazilian assets.

Writing by Bruno Federowski; Editing by Lisa Von Ahn

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