Brazil Receives  USD 1.7 Billion from New Development Bank

NDB provides financing for sustainable development programs in the largest country in Latin America. Another  USD 1 billion loan was signed by the Bank in October with the Brazilian Government.

On Wednesday, December 6th, Brazil signed two loans totaling  USD 1.7 billion with the New Development Bank (NDB). His Excellency, the President of the Federative Republic of Brazil, Luiz Inácio Lula da Silva, attended the contract signing ceremony for the “green loans” at the headquarters of the National Bank for Economic and Social Development (BNDES) in Rio de Janeiro. The contracts were signed by Mrs. Dilma Rousseff, President of the New Development Bank, and Mr. Aloizio Mercadante, President of BNDES.

The first loan of USD 500 million will finance the BNDES Climate Program to reduce greenhouse gas emissions and enable climate change adaptation actions. The USD 1.2 billion contract will support the sustainable infrastructure program and assistance to states and municipalities. “The mission of the NDB is to mobilize resources for investments in logistical, economic, and social development, expand alternative energies, and protect countries against climate change,” said Mrs. Dilma Rousseff.

BNDES will provide resources to the public and private sectors for projects in renewable energy, urban mobility, water and sanitation, transportation, and social infrastructure — information and communication technologies (ICTs) — with a focus on education and health. With a 24-year term, the financing allows up to 30% of the resources to be used by the bank for debenture financing in the defined sectors.

“The funds come at a crucial time when combating climate change is essential for the country’s sustainable development,” Mrs. Rousseff recalls. As the former President of Brazil, she and Mr. Lula da Silva participated in the United Nations Conference of the Parties meetings in Dubai, UAE, along with Mr. Mercadante. The world discusses at COP28 how to increase resources to reduce greenhouse gas emissions and meet the Paris Agreement’s goal of limiting global warming to 1.5°C by 2100.

“BNDES is an important vector for raising local and international resources for sustainable development and can finance various types of projects at the scale and speed required by the climate emergency,” said Mr. Mercadante. Former Presidents Pepe Mujica (Uruguay) and Ernesto Samper (Colombia) also attended the signing ceremony.

Approved by the Federal Senate of Brazil, the borrowings from the NDB are backed by the sovereign guarantee of the Union. The resources will be used by BNDES to finance public and private investments throughout the national territory, enhancing the Brazilian bank’s capacity to support the transition to a low-carbon economy and climate agenda.

“Development for us has to be sustainable and inclusive,” reminded the President of the NDB. “The BRICS bank seeks to contribute to improving living conditions for the majority of the population in developing countries, while promoting the dissemination of successful experiences in sustainable development and cooperation based on the spirit of true multilateralism.”

Since its inception, the NDB has supported 94 direct investment projects in each member country, amounting to approximately $33.8 billion. The bank has a pipeline of 78 projects for 2023 and 2024 totaling another $18.9 billion.

According to Mrs. Rousseff, of the total approved projects, the NDB allocated approximately $6.1 billion to Brazil over eight years, financing 21 projects. “Of this total, $2.8 billion or 45.9% of the resources for Brazil were approved only during my administration this year,” she said. In total, only the federal government received $2.7 billion from the BRICS Bank this year.

In October, another loan from the NDB, worth $1 billion, was finalized by Mrs. Dilma with the Finance Minister of Brazil, Mr. Fernando Haddad, during a meeting in Marrakech, Morocco. The funds were allocated to the Emergency Credit Access Program (FGI), created in 2020 to minimize the impacts of the COVID-19 crisis on small and medium-sized businesses. Again, it was only executed in 2023 through the initiative of Lula’s government. Until then, the previous government had disregarded the offer.

Regarding the two new loans, it’s important to note that implementing climate change mitigation and adaptation measures is considered significant as it helps Brazil meet its commitments under the Paris Agreement and the United Nations Sustainable Development Goals.

In 2015, under the Paris Agreement, Brazil presented its Nationally Determined Contribution (NDC), committing to reduce greenhouse gas emissions by 37% relative to 2005 levels by 2025 and by 43% by 2030. To fulfill its NDCs and commitments to sustainable development under the SDGs, Brazil needed an increase in resources and investments.

“We are working hard to meet the needs of the member countries of the so-called BRICS Bank,” Mrs. Dilma Rousseff said. The mission of the NDB, since its creation in 2014 by the governments of the five BRICS countries, is to mobilize resources for investments in logistical, economic, and social development, expand alternative energies, protect against climate changes, and build connectivity with digital infrastructure.