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By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Brazil’s Social and Economic Development Bank, BNDES, announced this week it would allocate approximately R$60 billion (around US$19.4 billion) from a total of R$170 billion (approximately US$55 billion) of disbursements planned for 2015 towards the infrastructure sector. The volume of disbursements for the sector, forty percent of the total made by the Bank, is similar to that seen in 2014, despite the overall deterioration of Brazil’s economic scenario this year.

Highways are one of the main infrastructure priorities for Brazilian government in 2015, Rio de Janeiro, Brazil News
Highways are one of the main infrastructure priorities for the Brazilian government in 2015, photo by Fábio Rodrigues Pozzebom/Agência Brasil.

Furthermore, BNDES also hopes to encourage the increased participation of the private capital market in the financing of infrastructure projects.

“BNDES does not have a budget which is elastic in growth, and it is fundamental for the capital market to join in the Bank’s efforts to finance infrastructure,” said Nelson Siffert, superintendent of the Infrastructure Department at BNDES during a congress sponsored by the Brazilian Association of Private Equity and Venture Capital (ABVCAP) this week. According to Siffert debentures will have a more relevant role in financing infrastructure projects this year.

The BNDES official stated that although the segments of energy and logistics are obtaining most of the attention today, with disbursements during the first quarter of the year alone increasing by ten percent, in relation to the same period last year, projects for such segments as urban mobility and sanitation should also obtain significant resources.

To encourage capital markets to finance infrastructure projects, Brazil’s economic ministers announced several measures that will make the sector more attractive on Thursday, April 9th.

Among the measures is the reduction of credit cost by BNDES to companies which issue debt bonds earmarked to projects financed by the government entity. According to the government the cost of credit for participating companies may decrease between one and two percentage points per year.

“There is a strong repressed demand for infrastructure investments in Brazil and we are working to transform this demand into concrete investments and projects,” said Nelson Barbosa, Minister of Planning, Budget and Administration, after a meeting in São Paulo with Finance Minister Joaquim Levy, BNDES officials and ANBIMA (Capital Market Entities’ Association).

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5 COMMENTS

  1. How can you write an article about BNDES’ loans and fail to say that they are state subsidised?

    Money is lent at 12% with Brazilian tax payers paying 50% of the cost and Brazil’s largest corporations receiving capital for less than inflation.

    Total capital lent as of 2014 end : R$670 billion
    Annual cost to Brazilian tax payers: R$40 billion plus any repayment failure.
    That’s greater than the cost of the Bolsa Familia, for which there is no capital risk.

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