Brazil: BNDES – extrication impossible

Rob Dwyer
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With a struggling economy, Brazil will continue to rely heavily on its state development bank to provide long-term finance for crucial infrastructure projects, unless private-sector alternatives can be found.

The new central bank HQ construction at the port zone in Rio de Janeiro has involved the highway being torn down and tunnels dug, but the office towers needed to make the R$8 billion ($2 billion) renovation viable are missing after a real-estate meltdown

Brazil’s state development bank, BNDES, has strongly denied market rumours about its reduced willingness and ability to support the government’s infrastructure-building programme. With the government desperately trying to plug a large and widening primary deficit there are persistent suggestions it may be forced to lower the volume of subsidized TJLP (long-term interest rate – at 7%, less than half the country’s base rate) financing to companies awarded concessions.

However, the planned investment in a series of concessions is the mainstay of the government’s attempts to restore GDP growth – with the latest package of highway, port, airport and railroad projects worth up to $49.5...