President Luiz Inácio Lula da Silva (PT) intends to extend funding through the National Bank for Economic and Social Development (BNDES) to other countries, but the bank’s current partners amount to R$5.1 billion in debt to the Institution.
Since 1998, when the credit line was created, some debtor countries have defaulted on their commitments. As of September 2022, there were unfulfilled payments from Mozambique (BRL 627 million), Cuba (BRL 1.1 billion), and Venezuela (BRL 3.5 billion).
If the debtor defaults, the BNDES is compensated by the Export Guarantee Fund (FGE), which covers defaults on national company operations abroad. The FGE has already repaid the bank about BRL 5 billion which means that there are still BRL 100 million left.
The origin of the resources that feed the RBD is Brazilian. The fund consists, for example, of the result of the financial investments of BNDES funds, commissions from the provision of guarantees and funds from the federal budget.
THE R7 questioned the BNDES on the date of full coverage of the amounts. The bank confirmed the refund will be made in full, but didn’t specify when.
According to the Secretariat for Social Communications of the Presidency of the Republic, “there is no risk of damage” because “the BNDES agreements include guarantees and insurance and there is a long tradition of receiving what you borrowed”. In addition, according to the prospectus, “the financing will be made for Brazilian companies that export and create jobs here in Brazil”.
Proposal is analyzed
The proposed expansion of BNDES funding was discussed by President and Treasury Secretary Fernando Haddad, who are on an official trip to Argentina, one of the countries to benefit from the line that provides for remittances to other nations, the BNDES Exim PostBoarding .
Lula said he will “seek” to expand the public bank’s relationships with partner countries, including Argentina. “I think it is possible and necessary for Brazil to support other countries with funding. We will do this within the framework of our country’s economic conditions,” the President said.
experts say
Lula’s efforts are viewed with “concern” by lawyer Ives Gandra. For the lawyer, the focus of the BNDES should be on internal growth. “We need to attract foreign investors to Brazil, not take companies abroad. He speaks of Brazilian funding for Argentina when in reality we need to invest in Brazil, our country is hungry and needs jobs,” he says.
Gandra also emphasizes the political nature of the problem. “We are all fighting and learning, including the federal government itself, that we cannot accept attacks on democracy. We must preserve Brazilian democracy, for that it is better to work with other democracies. So there is punishment here [pelos atos extremistas de 8 de janeiro]but wants to do business with dictatorships,” he argues.
Attorney Maria Victoria Hernandez Lerner, a former advisor to the BNDES executive committee, explains that the credit line operated abroad does not miss the bank’s goals. “The bank promotes the development of Brazilian companies. It is important to emphasize that the disbursement of BNDES resources for infrastructure in Brazil is about 36%, while support for the export of Brazilian goods and services abroad is 1.3% of the bank’s total expenditure,” he says.
car wash
Of the total value of the BNDES line to finance overseas works, 98% was delivered to Brazilian contractors investigated by Operation Lava Jato. When the investigations came to light in 2016, the BNDES reached an agreement with the Federal Ministry of Public Relations (MPF) and began requiring companies to sign a compliance agreement with governance rules as a condition for the release of resources.
Following the measure, the BNDES withheld R$56.5 billion, which was expected to be disbursed in 47 operations.