Bloomberg — The Banco Nacional de Desenvolvimento Econômico e Social (BNDES) intends to allocate up to 30% of its disbursements to finance local companies in the areas of innovation, sustainability and energy transition, within a plan to support the industrial sector with interest rates affordable.
Credit to the industry will grow gradually until the end of President Luiz Inácio Lula da Silva’s term, and could reach 60 billion reais (US$12 billion). if the bank meets its goal of expanding disbursements to around 200 billion reais by then. It will also depend on congressional approval of new rules that allow BNDES to set lower interest rates for specific sectors it wants to support, according to José Luis Gordon, the bank’s director of development, foreign trade and innovation.
“How is it possible to finance technological innovation with interest rates of 14%, 15% or even 16%? It’s impossible, as no one will take the risk,” Gordon said Wednesday in an interview. “We also have to think about more stable rates that offer conditions for companies to plan their businesses.”
The BNDES financing is a crucial part of Lula’s plans to revitalize Latin America’s biggest economy, which is slowing under the weight of high interest rates. The bank’s possible use of subsidized rates worries central bank chief Roberto Campos Neto, who has warned they could reduce the power of monetary policy and force the reference Selic type to stay high longer.
Gordon said, however, that the lower interest rates would be used strategically to support projects that would not otherwise receive funding. Also, unlike the previous governments of Lula and her successor Dilma Rousseff, those loans will not be subsidized by the Treasury and will not support large companies embarking on global expansion and acquisitions.
The role of the BNDES during previous left-wing governments has been clouded by accusations that it favored political allies and handed out generous bonuses to its employees. depending on the volume of credit operations that were closed, which gave rise to investigations for corruption. Internal investigations carried out by the bank found no irregularities.
Starring role
Now, the team that runs the institution wants to limit the scope of its loans to strategic projects that lack private financing, either because they are too long-term or in unproven areas. The BNDES also plans to finance exports of goods by Brazilian companies, Gordon said, adding that the bank is considering reducing the spread it charges for such loans, currently between 0.9 and 1.3 percentage points.
If the plan works, the BNDES would continue supporting the industrial sector with less than it did in its best days. Between 2000 and 2010, an average of 45% of its disbursements went to industry – only in 2009, the bank lent the sector 63.5 billion reais (US$12.9 billion) out of a total of 137.4 billion reais in disbursements.
That percentage fell to less than 20% during the Jair Bolsonaro government, when a liberal economic team slashed the bank’s holdings in stocks, local bonds and investment funds, also cutting credit lines.
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