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Brazil Boosts BNDES Subsidized Loans by $52 Billion, Extends Program
Brazil’s government increased to 134 billion reais ($78 billion) the amount of subsidized loans the state development bank can grant companies under a program to finance equipment purchases and technological innovation, according to a decree published on the Official Gazette today.
The program, which originally had a cap of 44 billion reais, was extended until March 31, 2011, from Dec. 31, the gazette said. The program was also broadened to include loans to consumer goods exporters and energy companies.
The decree that boosts available loans by 90 billion reais was issued after Congress failed to approve an 80 billion-real increase proposed earlier this year, according to a BNDES spokesman who asked not to be identified, citing internal policies.
President Luiz Inacio Lula da Silva’s administration is seeking ways to increase lending by state-controlled banks without having to issue public debt. Since 2008, the Treasury has lent 205 billion reais to the BNDES by transferring Treasury bonds to the bank, a move that has raised the country’s gross debt.
The government transferred the equivalent of 4.5 billion reais of Petroleo Brasileiro SA shares to the BNDES on Aug. 27, allowing the bank to increase loans by as much as 50 billion reais, according to estimates by Alexandre Albuquerque, an analyst at Moody’s Investors Service.
On Aug. 31, the government transferred 1.4 billion reais of debt owed by state-controlled power company Centrais Eletricas Brasileiras SA to the BNDES to further strengthen the bank.
Under the rules of the subsidized credit line, Brazil’s Treasury pays the BNDES the difference between the interest rate it charges clients and funding costs.
To contact the reporters on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net Arnaldo Galvao in Brasilia at agalvao1@bloomberg.net
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