BNDES: Brazil’s really big bank

Juan Forero reports on BNDES, the Brazilian Development Bank, A bank that may be too big for Brazil.
BNDES:

  • has loaned a third of a trillion dollars since 2010, twice the amount the World Bank provided to about 100 countries combined
  • According to critics, most of the money goes to the country’s richest and most politically connected companies, among them JBS (the largest contributor to Dilma Rousseff’s campaign), construction giant Odebrecht, and now-broke Eike Batista’s EBX Group (which received $4 billion in loans).
  • Treasury funds and payroll tax revenue are used for loans.
  • In exchange for loans, BNDES has acquired a minority stake in dozens of private companies, giving the bank’s executives a say in their operations.

For all practical purposes, BNDS is acting as an investment bank, not a public institution focused on fostering social development, while maintaining its lack of transparency,

But analysts say there is another downside to BNDES’s big spending: It fans inflation, which has remained stubbornly high at just under 6 percent a year.

To keep it under control, the Central Bank on Nov. 27 raised its benchmark rate to 10 percent. Such a high interest rate — the highest of any developed country — is believed to crowd out the development of private lenders.

What could possibly go wrong?

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3 Responses to “BNDES: Brazil’s really big bank”

  1. The handshake Carnival of Latin America and the Caribbean | Fausta's Blog Says:

    [...] « BNDES: Brazil’s really big bank [...]

  2. jlh Says:

    Maybe we could arrange a temporary 12-month swap: the BNDES for the Fed. It could be mutually educational, smooth out the NSA resentments and make corruption a truly inter-American institution.

  3. Fausta Says:

    That’ll actually make the news, JLH!