Sales of Federal Lands to Private Parties in Brazil Could Raise Billions in Revenue

RIO DE JANEIRO, BRAZIL – In recent weeks, Diogo Mac Cord, the Ministry of Economy’s Secretary of Privatization, has been traveling across the country on a special mission. Mac Cord is visiting dozens of federal lands and properties that can be sold.

According to the Ministry of Economy estimates, the federal government has title to some 750,000 plots of land, villas, apartments, and even cattle farms scattered across the country.

“These assets are part of the government’s privatization program,” says Mac Cord, Special Secretary of Privatization. The regularization and sale of only three such properties in the Federal District (one of them with 420 hectares) should yield at least R$1.5 billion (US$300 million) to the public coffers in the next two years and R$10 billion by 2025.

In most of Brazil, the program of real property privatization should require an additional effort. There are title records dating back 200 years to the time of the Empire, and numerous inccuracies in deeds relating to the property’s value, size, and other features.

To solve this glitch, the Secretariat of Privatization has partnered with the Ministry of Justice and the Federal Police to gain access to a georeferencing system, with satellite imagery, which provides updated high-resolution maps of the whole country.

“If someone has built something on a piece of federal land with no authorization, it will appear on the system in real time, and the Federal Police will be able to take action,” says Mac Cord.

Another novelty is the land tenure program. In the Federal District, three pilot projects are being conducted. In the area known as Sálvia Farm, a site of over 10,000 hectares occupied by 12,000 families, the land tenure process is being conducted jointly with the residents’ association. The low-income residents will pay nothing for the program’s costs, while the remainder will have to bear part of the costs.

The region of Vicente Pires, in the Federal District, has also been included in the government’s plans. Last week, a program was signed with the administration of the Federal District for the regularization of properties in the area. The operation is expected to yield R$1 billion to the local government over the next two years.

In Brasília, a 420-hectare plot of land that houses an inactive railway terminal forms the third leg of the pilot program. The goal is to develop a master plan, given the size of the land, and sell the lots. “It will be possible to raise R$10 billion over the next few years,” says Mac Cord.

The regulation of land and construction in favelas is yet another of the portfolio’s goals. Land tenure regulations will allow residents to sell the properties legally. Nowadays, militias and organized crime often control the sale of properties in favela communities, by means of informal contracts, at lower prices than those practiced by the market. “These projects will yield resources for the government and provide greater dignity to people’s lives,” says Mac Cord.

Source: Exame

For the full picture, see our Brazil Tax Reform: Complete Guide.