Petrobras has secured a large slug of cheap funding from BNDES, Brazil's state development bank.
Even though the economy has rebounded this year, BNDES loans have continued to rise sharply.
Those credits, for which the BNDES has offered IOUs, have led to accusations of creative accounting.
The national development bank, BNDES, has transformed from a stodgy local lender into a chooser of national champions.
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Brazil's national development bank, BNDES, has a mandate to promote the international expansion of Brazilian companies, among other things.
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But so long as Petrobras, Vale (a mining giant) and JBS get subsidised credit from BNDES, why should they?
First, BNDES seems to have gone on boosting its loans for too long.
When BNDES gets on board, it means NESA has met the 40 pre-requisites to building and Belo Monte gets underway.
According to IPEA, a government-linked research outfit, the BNDES's subsidised interest rates cost taxpayers up to 21 billion reais a year.
First, the National Development Bank (BNDES), whose loans cost about half the Selic rate, has expanded its lending by almost half.
Meanwhile, BNDES and the pension funds of the big state companies have increased their holdings in many of Brazil's largest private firms.
BNDES, among others, argues that, in order to boost exports of higher-value products, Brazil's handful of steel makers need to join forces.
In the case of BNDES, this has been part of a government policy to create Brazilian champions that are big enough to compete abroad.
It is paying for this partly by selling oil deposits to the firm and partly by more accounting sleight of hand involving the National Development Bank (BNDES).
No one is sure of the total subsidy but, as a guide, BNDES lends at about 6%, well below the yield on ten-year government bonds of 12%.
But the deal has one great advantage: it is supported by the government via the BNDES. Brazilian policymakers are worried about Brazil becoming mainly an exporter of commodities.
Second, BNDES is hampering the development of the financial sector.
And BNDES is practically alone in the long-term loan business.
At the end of November Mr Mantega said that he would provide the BNDES with only half as much extra funding in 2011 as it has had this year.
Another rapidly growing country with a decentralized government, Brazil has financed nearly every renewable energy project through the National Social Economic Development Bank (BNDES) with low-cost and long-term debt financing.
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Loans provided by BNDES are based in the so called TJLP long-term interest rate, which currently stands at 5%, while traditional loans carry a premium over benchmark Selic rate, currently at 12.25%.
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Once those 40 requirements have been satisfied, then Ibama will grant a full installation license and the massive Brazilian National Development Bank (BNDES) will likely step in with a bridge loan to get the project started.
In Brazil, where it is often said that an activist industrial policy helps to explain why the economy has been thriving, a surging state-owned development bank, BNDES, is probably crowding out other sources of finance (see article).
In the past three years the government has ramped up the resources of the national development bank, BNDES, by at least 210 billion reais, allowing it to expand lending for infrastructure projects and a host of other ventures less obviously deserving of state support.
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