Mercadante takes over BNDES with a focus on strengthening the industry for export

Economist and former minister Aloizio Mercadante (PT) took office as president of the National Bank for Economic and Social Development (BNDES), this Monday morning (6), and presented how the institution should act under the government of Luiz Inácio Lula da Silva (PT).

In general terms, the new financing policies will focus on micro, small and medium-sized companies, encouraging black and women’s entrepreneurship, infrastructure for sustainable development and strengthening the national industry for export and international competition.

The ceremony, held at the bank’s headquarters in Rio de Janeiro, was attended by President Lula himself and First Lady Rosângela Lula da Silva, Vice President Geraldo Alckmin (PSB), former President Dilma Rousseff (PT), in addition to ministers such as Marina Silva (Rede), Rui Costa (PT), Anielle Franco (PT), among other government and private sector authorities.

During the presentation of the bank’s new policies, Mercadante criticized the return of resources that the BNDES makes to the National Treasury, which totaled R$ 678 billion since 2015 “in the form of payment of principal, interest, early debt settlement and dividends”.

“This is an amount 54% higher than Treasury transfers to BNDES, from 2008 to 2014. This page needs to be turned. If we want to have a future, we will need a more present and active BNDES, and a balanced relationship with the National Treasury”, he said.

He also stated that he does not intend to compete with the private sector, but to act in specific segments and build partnerships in which the BNDES can contribute to reducing risk, opening new markets, extending deadlines and preparing good projects for investments.

“Only in infrastructure, our investment gap is currently around BRL 226 billion, that is, 2.6% of GDP per year. Private investment in infrastructure, which amounted to BRL 131 billion in 2022, will need to be heavily leveraged with the support of the BNDES,” he added.

Shortly afterwards, President Lula gave a speech and stated that the bank’s disbursements for investments rose from R$37 billion in 2002, when he took office, to R$168 billion at the end of his second term. And, in 2021, it dropped to R$ 64 billion.

“If the BNDES is a development bank and we realize that, when it invests, the economy grows, and when it does not invest, the economy does not grow, I keep asking myself how are we going to return investments in infrastructure work in this country,” he asked.

Industries for export and support for MSMEs

One of the main focuses of BNDES financing will be to make Brazilian industries more competitive in the international market, but without repeating past policies, such as the “national champions” that favored only a few Brazilian companies. During the last years of the second Lula administration and the first of Dilma, the bank injected R$ 18 billion without having the expected return.

Mercadante recalled the BNDES trajectory in financing national industrialization to go beyond the production of commodities (food and mineral resources), and cited examples of companies that gained scale, such as Embraer, which exports aircraft all over the world.

“To be competitive, Brazilian companies need to compete in this market [internacional], gain scale, competitiveness, efficiency. This is a fundamental agenda for the future of the BNDES, the industry and Brazil. We need to export, gain scale and integrate into global value chains”, he said, reinforcing that there is a “window of opportunity” for Brazil in foreign trade, in which the country needs to act in partnership with Latin American countries and with countries in the “Global South”.

Despite the intention to strengthen Brazilian industries for the export of goods with high added value, Mercadante said that the bank will also work on the development of the national productive sector with micro, small and medium-sized companies (MSMEs) “which are great job generators and income”, with a focus on digitalization and modernization of operations.

The BNDES plans to allocate R$ 65 billion in resources to these businesses, which also cover cooperatives, solidarity economy, encouraging women and blacks to entrepreneurship, among others.

Sustainability and infrastructure in the Amazon region

Another line that the BNDES plans to act strongly on is the incentive and financing of the low carbon industry, innovation and sustainability for the development and generation of employment and income in the Amazon region. Mercadante emphasized the institution’s commitment with the presence of Minister Marina Silva, of the Environment.

“Transitioning to a low-carbon economy with green, low-emission jobs is an imperative that will guide the Bank’s strategy. But, we need to do more. There will be no future without preserving the Amazon and other biomes. This will be the priority of the BNDES in the future”, he said.

This issue is based on three pillars, according to the economist: rebuilding the conditions to face deforestation through command and control operations; make viable structural and large-scale projects that generate sustainable development and keep the forest standing, protecting and providing emergency assistance to the most vulnerable, especially the Yanomami; and developing infrastructure, clean industry and scientific research, generating new employment and income opportunities for the region’s 28 million inhabitants.

New strategies and joint work with Caixa and BB

The new president took advantage of the ceremony to announce the creation of the Strategic Studies Commission, coordinated by economist André Lara Resende, who has chaired the BNDES in the past and was part of Lula’s transition team, and by the server José Roberto Afonso.

Also part of the commission are the former president of the Federal Economic Council, Antônio Correia de Lacerda, the servant Lavínia Barros de Castro, the former Minister of Health José Gomes Temporão, the former dean of the Federal University of Viçosa and former minister director of education Luiz Claudio Costa, and Élida Graziane, prosecutor of the Public Ministry of Accounts of the State of São Paulo and specialist in public budget.

“This commission will open the debate and invite more specialists, intellectuals, researchers and leaders, rescuing the role of the BNDES on development policies for Brazil”, said Mercadante, also emphasizing that the bank’s new strategies will be conducted in synergy with the Bank of Brazil and Caixa Econômica Federal.

BNDES’ “black box” is a thing of the past

Mercadante also recalled that the BNDES and its employees went through “situations of extreme injustice”, when questions arose about the financing granted to Brazilian companies that operate in other countries. Afterwards, President Lula stated that the international audit carried out at the bank cost R$48 million without revealing any irregularities.

“The BNDES never gave money to ‘government-friendly countries’. The bank financed the engineering service of Brazilian companies in no less than 15 countries in Latin America and the Caribbean between 1998 and 2017”, he said.

In spite of this, Lula acknowledged that there are some contracts in arrears, such as those signed for works in Venezuela and Cuba. However, he claims they are “backed by collateral” but that the bank balance is still positive.

Lula took advantage of Mercadante’s inauguration to criticize the Central Bank again for the high interest rate which, according to the last meeting of the Monetary Policy Committee (Copom), should not fall again as the financial market projected, for the beginning of the second half.

According to Lula, “there is no justification for the interest rate to be, at this moment, at thirteen and a half percent (sic). just see the letter [ata] of Copom [Comitê de Política Monetária do Banco Central]
for us to know that this increase in interest rates and the explanation they gave to Brazilian society is a shame”, he said.

The basic interest rate has been at 13.75% since August last year, compared to 10.75% a year ago, according to the Central Bank. Lula also skewered the members of the Federation of Industries of the State of São Paulo (Fiesp) present at the ceremony, which he was constantly charged with every increase in the Selic and who, since the last government, have not spoken out at every increase in the rate.

“When the Central Bank depended on me, everyone complained. The only day that Fiesp spoke was when it raised interest rates. Now she doesn’t speak. In my time, 10% was a lot, and today thirteen and a half (sic) is little, ”she said.