PRIVATIZATION PROGRAM
NATIONAL PRIVATIZATION PROGRAM - 1991/1999
US$ millions
| Sector | Number of companies |
Result | Transfered Debt |
Total |
| Metallurgy Petrochemical Railways Mining Telecommunications Energy Others Participation |
8 27 7 2 25 3 16 0 |
5,562 2,698 1,698 3,305 26,970 3,907 1,401 1,040 |
2,626 1,003 0 3,559 2,125 1,670 343 0 |
8,188 3,701 1,698 6,864 29,095 5,577 1,744 1,040 |
| Federal State |
88 29 |
46,581 23,724 |
11,326 5,311 |
57,907 29,035 |
| Total | 117 | 70,305 | 16,637 | 86,942 |
Source: BNDES In May/99
Preparation: MF/SPE
The privatization and concession program was strongly stimulated after the stabilization of prices resulting fron the Real Plan. It results as much from the redefinition of the Brazilian productive sector’s structure, substituting the old tripod (state companies, major domestic and family-owned companies and foreign companies), as from a strategy for structural adjustment of the public accounts.
Such redefinition was fundamental to relieve the State from contributing with resources for the modernization and expansion of state companies. This is essential in an open economy that has been part of an increasingly competitive international environment. Moreover, fiscal resources have ceased to be consumed in activities in which the participation of the State is no longer necessary, thus directly contributing to the achievement of better primary fiscal results and favoring the restructuring of public spending of basic social services.
The privatizations, limited between 1991 and 1995 to companies controlled by the Federal Government in the industrial sector, were largely broadened in the last four years. They have not only reached other sectors of the economy, namely infrastructure, starting from the reforms of economic order and of the approval of the Law of Concessions, but also other government spheres, particularly the States.
An important aspect of the privatization and concession program is its contribution in attracting direct foreign investment, supporting the modernization and improvement of the Brazilian economy. From an annual average level of US$ 1.2 billion in 1992-1993, direct foreign investment reached an annual average of US$ 21.6 billion for the period of 1997-1998, which is equivalent to practically two thirds of the deficit of the external accounts in the same period.
Another important aspect of the privatization program is its influence on the increase of the aggregate investment rate, which rose from 14.5% of the GDP in the 1991-1993 period to 16.9% of the GDP in the 1994-1999 period (data for 1999 equals the average of four quarters until March.)
NEXT PRIVATIZATIONS
| · Eletric Sector · Banks · Insurance Sector: National Reinsurance Institute (Instituto de Resseguros do Brasil - IRB) · Public Offers: Cia. Vale do Rio Doce - CVRD, Petrobrás and Light · Highways Water and Sewage |
The greatest benefits resulting from the privatization program include the resumption of investments in key sectors for the country’s development, such as telecommunications, energy and transportation. Such recovery constitutes a decisive process to remove economic bottlenecks, which have accumulated for more than one decade. Also important for the economy as a whole, are the efficiency gains associated with the substitution of the state administration by the private administration of for infrastructure services, and the implementation of a regulatory system that favors competition amongst the providers of such services. Furthermore, the privatization revenues contribute to the reduction of public debt, therefore providing a potential decrease in debt payment arrangement.