BNDES continues to step up infrastructure financing

Brazilian development bank BNDES stepped up its approvals of financing for the infrastructure sector in the first nine months of the year, giving the green light to 40.8bn reais (US$7.2bn) in loans, or 8% more than in the same period of 2023, it said in a statement.

The level of financing put the bank on track to reach record levels, with the highest amount of credit ever approved registered at 50.8bn reais in 2014.

The active role of BNDES in financing infrastructure is widely recognized by stakeholders as a key driver behind the growth of projects, concessions and PPP contracts observed in the country in recent years. 

"Currently, we have a new and unprecedented [infrastructure] financing model with three pillars, and one of those pillars is public funding, through state-run development banks such as BNDES," Roberto Guimarães, former treasury secretary and now planning and economics director at Brazilian industry and infrastructure association Abdib, told BNamericas.

According to Guimarães, the other key pillars supporting the advance in infrastructure project financing are the multiple funding options available in local capital markets, such as debenture issues, as well as the support provided by international multilateral institutions.

However, the increasingly important role of BNDES in financing infrastructure is viewed by some as a strategy that could be risky.

"In past administrations of the ruling Workers' Party, BNDES accelerated loan levels too much and that led to major distortions in the credit market due to a series of subsidized loans. We must always view the aggressive expansion of BNDES loans with some caution, to ensure that the problems of the past aren't repeated," Reginaldo Galhardo, foreign exchange manager at local brokerage Treviso Corretora, told BNamericas.

BNDES has increased its financing activity since the start of President Luiz Inácio Lula da Silva's administration in January 2023, aiming to boost projects in the sector as a way of creating jobs and stimulating economic activity.

"BNDES has resumed investing in a sector that is essential for the country’s economic and social development under President Lula’s administration. Infrastructure projects, from sanitation to highways, are crucial for ensuring quality of life for the population and for boosting other key sectors of the economy, such as stimulating industrial production and facilitating the transport of agricultural products, in addition to creating jobs and income," BNDES president Aloizio Mercadante said in a statement.