Brazil's federal highways deteriorate further

By
Thursday, October 11, 2018

Pavement quality of highways under the administration of Brazil's federal government deteriorated, as fiscal restrictions forced the reduction of investment in the area.

Only 59% of the 57,200km of highways under federal administration are in good shape, down from 67.5% in 2017, according to a study by national transport infrastructure department DNIT and published by the transports ministry.

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The study showed that 18% of the highways are in a regular state, 10% are bad conditions, and 13% are considered terrible. In the 2017 survey, 21% of highways were considered regular, 7% bad, and 5% terrible.

The deterioration of highways across the nation came as federal government reduced the volume of investments in maintenance, due to fiscal restrictions amid the reduction of tax collection. Brazil's economy contracted 3.5% in 2015 and also in 2016, and since then it is facing challenge to recovery the lost ground. In 2017 country's GDP expanded just 1% and this year it is projected to expand at a similar level, according to economists.

Over the last years, the transport ministry's road budget contracted by 28% from 9.66bn reais (US$2.56bn) between 2011 and 2014 to 6.97bn reais from 2015 to 2018, according to the DNIT study.

HIGHER LOGISTICS COSTS

The poor quality of highways across Brazil increased logistic costs for companies.

Logistics costs increased to around 12.4% of companies' gross revenues last year, up from 11.7% in 2015, according to a study by think tank Fundação Dom Cabral.

This increase translates into 15.5bn reais additional expenses for local companies, which already pay higher logistics costs than companies elsewhere.

"Unfortunately, we have not seen the government investing in infrastructure so the trend is that we will have the continued deterioration of our infrastructure networks, mainly our roads, and this is likely to generate more costs for companies," study author Paulo Resende told BNamericas earlier this year.