SAO PAULO (Reuters) - Brazil’s leftist Workers Party would use part of the country’s $380 billion in currency reserves to finance an infrastructure development fund if victorious in October presidential elections, a party official said in an interview.
Marcio Pochmann, an adviser to former President Luiz Inacio Lula da Silva and a coordinator of his planned run for a third term, said roughly 10 percent of the reserves would be destined for the fund and supplemented by other sources such as loans from state banks Banco do Brasil (BBAS3.SA) and Caixa Economica Federal as well as borrowing in the form of debentures.
The funds would be used to re-start various unfinished projects throughout the country in areas ranging from sewage to highways and help stimulate the country’s still weak economic growth rate, Pochmann told Reuters late on Monday.
Though there is little question that Brazil is an infrastructure laggard - business group CNI estimated earlier this month that there were 517 projects paralyzed throughout the country for lack of funds - the idea of raiding currency reserves in a year when the Brazilian currency slid 12 percent against the U.S. dollar could prove controversial.
“Other countries - Bolivia and Ecuador - previously used their reserves and it looks like there are no technical issues in terms of using them to finance medium to long-term infrastructure investments,” Pochmann said. “This would be a mechanism to create a large fund to relaunch investment in Brazil.”
The party intends to name Lula, jailed on bribery charges since April but still Brazil’s most popular politician, as its candidate in the October election. If an electoral court due to rule on his eligibility as soon as next month bars his candidacy, he is expected to anoint a successor from within party ranks.
Pochmann also reiterated plans, outlined by potential Lula heir and former Sao Paulo Mayor Fernando Haddad, to raise taxes on banks to force them to cut their lending margins as a way of stimulating credit.
Turning to another hot-button issue in Brazil’s presidential campaign, Pochmann said the Workers Party would bar Boeing Co’s (BA.N) proposed acquisition of most of domestic planemaker Embraer’s (EMBR3.SA) commercial jetliner business.
“The Boeing deal would mean the end of Embraer,” he said. “There is no guarantee that it would remain in Brazil. On the contrary, all its military technology would tend to disappear.”
Pochmann also said the Workers Party would revise state oil company Petrobras’ (PETR4.SA) ambitious asset sale and debt reduction targets if elected and also cancel President Michel Temer’s plan to privatize state utility Centrais Eletricas Brasileiras (ELET6.SA).
“These companies, in truth, given their role, can’t just be seen through the corporate lense,” he said. “Because these are strategic sectors for Brazil.”
Additional reporting by Eduardo Simoes; Editing by Tom Brown