Wednesday, 11 February 2009

BNDES Raises Limit for Loans for Telecom, Energy, Oil and Manufacturing Projects, Keeps Borrowing Costs Below Benchmark Selic

In an expected move (and I say expected because we should expect any move by this administration to extend credit to fend off the current crisis,) Brazil's state development bank BNDES raised from 60 percent to 80 percent the maximum amount it can lend to projects in the oil, manufacturing, electricity and telecom sectors. Borrowing costs applicable to this programme will be 11.25 percent, below the Selic rate. Oh! That is not a dumping-like credit activity, no, no, no!!! Luciano Coutinho, the BNDES president, said yesterday that the prior limit was established as a way to restrict credit at a moment where the bank lacked of enough money to lend to companies. But, since the crisis unleashed, the bank was pumped 100 billion reais in capital, courtesy of the National Treasury and at the expense of Brazilian taxpayers, with no requirements for transparency or corporate governance. And more gifts it have received. Isn't it a bit irresponsible that the BNDES is increasing excessively its exposure to a few sectors that are being affected by the credit crisis in a significant manner, with no obligation to disclose its lending standards?

As the government moves to use corporate financing as a tool of political control of the private economy in Brazil, using the crisis as an excuse, companies face a dilemma: either they abide by BNDES terms or are against them. ''Either you are with or against me,´´ seems to be the new Lula motto.

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