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The BNDES Experience: Development Financing in Uncertain Times

Learn about the strategic role of the BNDES in Brazil, its long-term financing impact, and the changes post-crisis. Discover BNDES' key areas, like infrastructure and small business support.

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The BNDES Experience: Development Financing in Uncertain Times

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  1. 35th ADFIAP Annual Meetings Istanbul, Turkey, April 26, 2012 Development Financing in an uncertain world: the BNDES experience Tiago Soeiro

  2. BNDES Highlights Brazilian Development Bank • Founded on June 20, 1952 • 100% State-owned company under private law • Key instrument for implementing the federal government’s industrial and infrastructure policies • Main provider of long-term financing in Brazil • Emphasis on financing investment projects • Support for micro, small and medium-sized companies • Brazilian Export Bank

  3. Time Line 50s 60s 70s 80s 90s 00s Today Infrastructure Heavy Industry– Consumer Goods Small and Medium-Sized Enterprises Technologic Development Imports Substitution Energy Agribusiness Exports Privatization Program Urban and Social Development Social Inclusion Innovation Sustainability Small Business

  4. The strategic role of development financing Long-term financing is aimed at • More and better work opportunities • More and better infrastructure • More and better competitive capabilities As markets are pro-cyclical • A development bank is an instrument of systemic stability • But… Attention!! Scale and scope matters… Banks must have adequate resources and instruments

  5. The crisis has changed the size of the BNDES Disbursements 96.3 100 82.3 Long Term + Countercyclical 80 71.6 60 49.8 40 34 Long Term 24.1 19.8 13.8 20 11.7 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 US$ billion Source: BNDES Converted to US dollar on disbursement dates

  6. BNDES’ Counter-cyclical role Credit to GDP and BNDES share The crisis Source: Brazilian Central Bank

  7. 3.10% 2.10% 0.68% 0.60% 0.50% 0.20% 0.15% 0.15% 0.14% 0.11% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 BNDES Non-Performing Loans Brazilian Financial System Average NPL - Default Rate Source: BACEN (Mar. ’12) 3.6%

  8. Development banks: scale and scope matters • Instruments • Direct operations • Indirect operations • Financing & guarantee for SMEs • Export finance • Project finance • Equity investments • Grants

  9. Indirect Operations Indirect Operations Companies financed through an accredited financial institution Information & Relationship Accredited Financial Institution ENTERPRISE

  10. Indirect Operations 60 1.000 894 607 900 50 800 700 40 600 389 Disbursements - US$ billion N° of operations in thousands 30 500 202 50.2 53.3 400 205 20 300 121 30.6 117 200 124 143 135 10 103 43 26.2 19.8 55 102 51 59 29 100 13.4 10.4 6.5 7.6 4.8 5.1 5.7 6.1 4.9 4.5 6.8 5.6 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Disbursements N° of operations Indirect Operations Disbursements and Number of Operations

  11. During the crisis: pro-active policies sharply decrease the cost of capital Pedidos de Liberação da FINAME (média acumulada em 22 dias em R$ Milhões até 06/12/2010) 300 250 set/08 200 153.0 150 100 jul/09 50 60.5 0 jul-09 jul-08 set-08 jan-09 fev-09 jun-09 jan-08 fev-08 jun-08 abr-09 abr-08 out-08 dez-07 dez-08 ago-09 mai-09 ago-08 mai-08 nov-08 mar-09 mar-08 Growth Rates (3Q2008= 100) GDP Household consumption Government Investment Exports BNDES’ monthly disbursements to acquire capital goods (R$ million) Média abr-nov/10 214.5 Início do PSI PSI launched PSI Investment Support Program in which interest rates are reduced jul-10 set-09 set-10 jan-10 fev-10 jun-10 abr-10 out-09 out-10 dez-09 ago-10 nov-09 mai-10 nov-10 mar-10 Source: BNDES

  12. Statements and beliefs

  13. Development, financing and the State • Contemporary State: focus onbuilding up competences => more and better jobs. • Developing financing for the long term demands => more State and more Market. • Public banks are essential for systemic stability and the permanent availability of investment financing. • To be effective, a Development Bank must have the necessary means: resources and instruments.

  14. 35th ADFIAP Annual Meetings Istanbul, Turkey, April 26, 2012 Development Financing in an uncertain world: the BNDES experience www.bndes.gov.br/english/

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