Level of Public Investment ∈Brazil Is the Worst ∈ the Last 10 Years
09/11/2017
MAELI PRADO
MARIANA CARNEIRO
FROM BRASÍLIA
The public investment ∈Brazil reached the lowest level __(I)__ the last ten years, which has contributed to push down the G.D.P. (Gross Domestic Product) even more.
__(II)__ a strong effort to reduce expenditure and meet the fiscal target, the investments made by the federal government ∈ the first seven months of this year have totaled R16.3billion(US 5 billion), nearly R10billion(US 3.1 billion) less ∈ comparison __(III)__ the same period ∈2016 and the lowest amount since 2008, when the series began to be recorded by the National Treasury.
This total includes public construction and the purchases of new facilities for government agencies, as well as materials for permanent use, such as computers.
Investments are natural candidates to be cut __(IV)___ times of adjustment, as more than 90% of public expenditure follows outlay rules and cannot be reduced without a change ∈ legislation.
On the other hand, they are an important factor to stimulate the economy.
Manoel Pires, an economist _(V)__ FGV and former secretary of Economic Policy of the Dilma Rousseff administration, says that cutting investment has a strong impact __(VI)__ the activity - much more than the decline ∈ expenses related to civil service or subsidies.
“When subsidies are increased, the effect __(VII)___ the activity is marginal. In the cases of expenses related to public servants’ wages, it is between 0.6 and 0.7 [percent] of the G.D.P. For investments, that number reaches between 1.4 and 1.6 [percent].”
In other words, for every R1(US 0.3) spent __(VIII)__ the government with investment, the G.D.P. increases by R1.60(US 0.5). If there is as cut, it has an opposite effect.
The text states that
