BNDES restructures export financing program – 07/02/2023 – Panel SA

In an effort to correct past mistakes, the BNDES asked the TCU for guidance on structuring the program for financing exports of goods and services in order to avoid defaults such as those in Venezuela and Cuba.

Bank technicians claim that a bill with the new regulations would be better. Auditors of the court of accounts consider that the changes could be made without congressional approval.

During Lava Jato, exports by contractors with the bank were investigated by the Federal Police. Although an alleged corruption scheme in the contracts has never been proven, doubts have always hovered over funding due to the volume of resources destined for projects in countries friendly to the Lula government.

Today, only Venezuela owes US$ 1 billion to Brazil, an invoice that, as Panel SA reported, was collected from Nicolas Maduro when he was in Brazil, on a visit to President Lula. There are other defaulting countries.

This is precisely where the BNDES intends to reinforce the program. The idea is to demand stronger guarantees from countries that import goods and services from Brazilian companies.

Bank technicians were at the TCU (Tribunal de Contas da União) to understand the main weaknesses of the program.

About two weeks ago, auditors from public banks in the court of accounts went to Rio de Janeiro, the BNDES headquarters, for a presentation in which the bank showed how it intends to reinforce operations.

In TCU’s assessment, the biggest problem lies in the structure of guarantees. In the case of Cuba, for example, in case of default, Brazil could pawn sugar. Venezuela would have to pay with oil.

However, there are difficulties in operationally making the execution of these guarantees feasible.

That’s what the BNDES is going to correct to resume the program that, strictly speaking, never caused a loss to the bank.

The default by importing countries was on the Fundo Garantidor de Exportações, fueled by insurance premiums paid by importers to the National Treasury. Taking out insurance is a requirement for financing.

With the delay in payments, the insurance paid the BNDES until the importer honors the loans.

contractors

The service export market has always been led by domestic contractors who, with Lava Jato, disappeared from the scene.

Brazil once had 2.3% of the global market for engineering services —which is around US$500 billion, according to the companies— and today it has less than 1%.

With the loss of protagonism of Brazil, other development banks gained space, such as EximBank (USA), KfW (Germany) and China Exim-Bank. They dominated Latin America, previously a BNDES territory.

With Diego Felix

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