Brazil accelerates its privatization agenda under the Bolsonaro umbrella

Brazil intends to accelerate its privatization agenda in 2020 with the sale of 300 assets worth 36,000 million dollars and has redoubled its efforts to attract investors willing to bet in the South American country.

Following a liberal court agenda, the Government of President Jair Bolsonaro has proposed to reduce the size of the State to a minimum and expects to end his term on January 1, 2023 with only one hundred public assets, of the 695 in which he had Direct or indirect participation at the beginning of 2019.

According to data from the Ministry of Privatization and Divestment, Brazil disposed of 71 assets last year, with which it raised 105,400 million reais (about 25,707.3 million dollars), 25% more than initially planned.

By 2020, the Government has set an even more "ambitious" goal and will attempt to raise $ 36 billion, equivalent to 1.7% of GDP, with the sale of assets, including a large number of state power subsidiaries. Eletrobras and the Social Security Technology and Information Company (Dataprev), among others.

"It is a very ambitious plan. The first year (of Government) is learning, we were focused on pension reform, which consumed us a lot of energy, but now our focus is on privatization and there is a very big job that It still has to be done, "said Privatization Secretary Salim Mattar, in an interview with Efe.

The Government has already ruled out the privatization of the jewels of the crown of the Brazilian State - the state oil company Petrobras and the Banco do Brasil - and has postponed to 2021 the destabilization of the Post Office due to its high "complexity".

However, one of its priorities will be the sale of state power company Eletrobras, which has direct control over some 200 companies and whose privatization still depends on the approval of Congress.

"There is a receptivity on the part of the Brazilian Congress and we expect that Eletrobras will be capitalized this year," said the secretary in an optimistic tone.

According to Moody's risk rating agency, the privatizations planned for this year could strengthen Brazil's credit profile.


After granting more than thirty assets to the private initiative in 2019, the Government plans to auction another 44 projects in the infrastructure area, including 7 roads, 6 railway lines and about a dozen port terminals, although There are divergences as to whether the port of Santos, the largest in South America, will be included in the 2020 list.

There are also 22 airports, including the tourist city of Foz do Iguazu and capital cities such as Curitiba, Goiania, Palmas, Branco River, Porto Velho, Boa Vista and Manaus.

But the federal government is not the only one interested in auctioning its assets. Several Brazilian states have initiated a similar plan at the regional level, including Sao Paulo, which in early January made the largest highway concession in the country, with 1,273 kilometers distributed throughout 62 municipalities.


Brazil is looking for investors inside and outside Brazil and will not put "any type of restriction" on the entry of foreign capital, regardless of where it comes from, Mattar said.

Still in campaign, Bolsonaro, a firm ally of the United States, expressed suspicion about China and came to denounce that the Asian country wanted to "buy Brazil." However, the president began to moderate the tone when he came to power and shook hands with the Asian power in search of entrepreneurs willing to buy state-owned companies.

"Capital for us has no color. Any capital will be welcome," said the secretary, who attributed Bolsonaro's statements to an electoral speech.

The investor, according to Mattar, is "rational" and does not take into account the continuing controversies that have arisen within the Government, most of them starring the leader of the Brazilian extreme right.

"The president speaks with his audience, with the mass, but the economic agenda is carried by (the Minister of Finance) Paulo Guedes and (the investors) trust him. It does not harm the appetite of investors," said the secretary.

Brazil was the fourth country in the world that most attracted foreign investment in 2019, according to the United Nations Agency for Trade and Development (Unctad).

The country received 75,000 million dollars of foreign direct investment, which represents an increase of 26% compared to 2018, driven, in part, by the privatization program and "the Government's efforts to stimulate the economy," according to the Unctad.

Alba Santandreu


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