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Brazilian government defends World Cup economics

Stung by criticism of protestors during the Confederation Cup, the Brazilian federal government has reminded the world of the importance of investments to the 2014 FIFA World Cup Brazil and its legacy to the country. According to Sport Minister Aldo Rebelo, nearly all of the projects were already included in Brazil’s Growth Acceleration Program (PAC). These projects are geared toward urban mobility, ports and airports in an effort to expand and modernize infrastructure in Brazil’s metropolitan regions. Rebelo said:

This means that they are strategically important to Brazil and that they would be carried out regardless of whether the country receives the World Cup. These projects are geared toward urban mobility, ports and airports in an effort to expand and modernize infrastructure in Brazil’s metropolitan regions for the benefit of the population. There are also investments to develop tourism and business services.

Some of Brazil’s stadium projects are at the heart of wider developments. The Pernambuco Arena being built in Recife is not simply a stadium but also the heart of a new suburb of the city that will be built around it, including a university campus, residential and leisure facilities. See picture above and the article in the Summer issue of PanStadia & Arena Management.

The government has presented some key numbers:

Total cost of investments in the 2014 World Cup Matrix of Responsibilities (including public and private resources) – R$ 28.1 billion

Investments by Area

  • Urban mobility – R$ 8.9 billion
  • Airports – R$ 8.4 billion
  • Stadiums – R$ 7.6 billion
  • Security structures, equipment and training – R$ 1.9 billion
  • Ports – R$ 700 million
  • Telecommunications – R$ 400 million
  • Tourism – R$ 200 million

Note: The difference of R$ 2.6 billion in relation to the last version of the Matrix published in April 2013 is primarily due to the private resources recently granted to the sector for investment in airports.

Division of Responsibility Across Public & Private Sectors (Matrix of Responsibilities)
The investments included in the Matrix are signed and agreed upon by representatives of the federal, state and municipal governments from the 12 host cities. Nearly three fourths of the investments in projects that are part of the Matrix of Responsibilities are designated for infrastructure and services for the country. The total amount of investments within the Matrix of Responsibilities, by sector is:

  • R$ 8.7 billion are federal investments
  • R$ 6.5 billion are allocated from the federal budget
  • R$ 7.3 billion are local resources (state and municipal governments)
  • R$ 5.6 billion are private resources

Stadium Construction
The federal government is playing a part, through financing from the National Bank for Social and Economic Development (BNDES), to build and refurbish the arenas, with a maximum limit of R$ 400 million per project. The loan was made with all the usual guarantees of such an operation in any  sector of the Brazilian economy, including for projects that serve to drive development and generate employment and income.

The government also believes that the World Cup boosts the Brazilian economy:

  • More than R$ 112 billion is additionally expected to flow into the Brazilian economy from 2010 to 2014.
  • 3.6 million jobs are also forecasted to be created.
  • For each Real invested by the public sector, an estimated R$ 3.4 will be invested by the private sector for infrastructure projects.
  • R$ 63.48 billion in income is expected to be generated for the Brazilian population from 2010 to 2014.

Source: Ernst & Young/FGV: “Sustainable Brazil – Socio-Economic Impacts of the 2014 World Cup”.

The government also states that the World Cup already benefits the country:

  • A total of 24,500 jobs have been created via the six stadiums for the 2013 Confederations Cup.
  • R$ 100 million in new business has been generated for Brazilian micro and small companies that are the principal employers of those involved in construction work and services generated by the World Cup.
  • 903 foreign entrepreneurs from 70 countries are benefiting from the Agency for Promoting Exports during the Confederations Cup and an extra US$ 1 billion is expected from exports of national products over the next twelve months.
  • 86,000 workers are taking training courses offered by Pronatec Copa.

Taking on the criticism of protestors about where tax payers’ money is going, the government gives figures to show that investments in education and healthcare in Brazil almost tripled between 2007, when it was announced that the 2014 World Cup would be hosted by Brazil, and 2013:

  • Investments in healthcare have more than doubled during this period.
  • Education has received investments totalling R$ 311.6 billion.
  • Healthcare has received R$ 447 billion during this period.

Rebelo said.

In 2013 alone, the budget in the areas of healthcare and education amounts to R$ 177 billion. The budget of the Ministry of Sports is approximately one percent of this total, which includes resources allocated for the 2014 World Cup and 2016 Olympic Games. Therefore, no resources are being diverted from other areas to build stadiums.

Source: Secom