On October 12, 2023, the New Development Bank (NDB) and the Federative Republic of Brazil signed the Loan Agreement for Brazil Emergency Assistance Program for Economic Recovery Project. The Loan Agreement was signed by H.E. Mrs. Dilma Rousseff, NDB President and Mr. Fernando Haddad, Minister of Finance of Brazil in Marrakesh, Morocco.
The ceremony took place in the African country as Mrs. Dilma Rousseff and Mr. Fernando Haddad were participating in a meeting organized by the International Monetary Fund and the World Bank Group in Morocco, alongside other finance ministers and heads of multilateral development banks. Mr. Leslie Maasdorp, NDB Vice-President and CFO and Mr. Anil Kishora, NDB Vice-President and CRO also attended the signing ceremony.
The Emergency Program (Program) will contribute to economic recovery in Brazil. Its objective is to improve small and medium-sized enterprises’ (SMEs) access to credit by providing guarantees to help them overcome temporary liquidity problems, ensure the continuity of their operations, and strengthen their financial sustainability, thereby preventing significant loss of jobs.
The Program specifically aims to enhance credit access for Brazilian SMEs through the credit guarantees provided by the Emergency Access to Credit Program – the FGI-PEAC.
FGI-PEAC is expected to improve SMEs’ access to credit, improve credit terms,
increase credit limits, and reduce the interest rates of contracted loans. The Brazilian National Development Bank (Banco Nacional de Desenvolvimento Econômico e Social, BNDES), as FGI-PEAC manager, has established SME and operations eligibility criteria that take into account environmental and social considerations.
Aligned with Sustainable Development Goal (SDG) 8 on Decent Work and Economic Growth, the Program directly supports SMEs and safeguards jobs, making a significant impact on Brazil’s labor market. Furthermore, the Program’s indirect impacts on society align with SDG 1 on Poverty Alleviation, SDG 9 on Industry, Innovation, and Infrastructure, and SDG 10 on Reduced Inequalities.
“This is a substantial loan with interest at SOFR + 1.64%, for a duration of 30 years. Given these terms and the envisaged timeframe, it is undoubtedly a loan that can facilitate strategic investments. It is especially gratifying for me to sign this contract on October 12, the Day of Our Lady of Aparecida, the patroness of Brazil. These are 5 billion Brazilian reais, resources that come at an opportune moment as the country, under the leadership of President Lula, works towards its reconstruction, strengthening society and the economy, promoting social inclusion, and seeking to recover jobs and economic growth,” added Mrs. Dilma Rousseff.
“The NDB rejects the imposition of conditionalities related to the definition of public policies. It is in the bank’s DNA that each country defines its own development strategy. The NDB is a bank created by and for countries of the Global South,” stressed NDB President.
Background information
The NDB was established in 2015 by Brazil, Russia, India, China, and South Africa to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries. In 2021, NDB initiated membership expansion and admitted Bangladesh, Egypt, United Arab Emirates and Uruguay as its new member countries.