São Paulo – The financing by the Brazilian Development Bank (BNDES) for the area of infrastructure is going to double by 2010. According to the president at the organisation, Luciano Coutinho, disbursements for the sector totalled 35 billion Brazilian reals (US$ 15 billion) in 2008, and should reach 50 billion reals (US$ 22 billion) this year and double the total for last year in 2010. The forecast, according to him, is based on projects already under analysis by the bank.
"In the area of infrastructure, no project is being cancelled," said Coutinho on Friday (06), in São Paulo. He added that, despite the international crisis, Brazil is still offering quality opportunities, high levels of return and low risk. "We have spent over two decades with lack of investment, with repressed demand. Even if the country does not grow, this demand for infrastructure, energy, logistics, etc, needs to be supplied," he added.
In the federal government’s Growth Acceleration Program (PAC) alone, the BNDES has 280 projects in the waiting, among them hydroelectric power plants, sanitation, public transportation, railways and highways, among others. Coutinho pointed out that several works were tendered during the toughest moment of the crisis and, notwithstanding, there was great private sector interest, including the offer of lower tariffs for end users.
"The investment frontier in Brazil is very robust," he said. "The government project is one of acceleration and the country has sufficient power to sustain it, and is going to manage to invest and even surprise," he pointed out. The PAC includes enterprises in all areas of the government, from state-owned companies to private ones.
Coutinho pointed out that Brazil is the country currently in the best condition to leave the crisis, more so than other great emerging economies like China, India and Russia. Apart from the austere macroeconomic policy adopted for over a decade, the measures taken up to now to fight the lack of credit and the repressed demand for infrastructure, the executive recalled that the country still has great potential for further domestic consumption, making it less vulnerable than nations that depend greatly on exports. After all, there should be retraction in foreign trade.
Different from what happens in developed nations, where consumers are highly indebted, in Brazil the relation between credit and family income is low and there is a great aspiration for consumption that may be stimulated. One example mentioned by him is the great housing deficit that is still present in the country.
To Coutinho, even if the average performance of the global economy is bad in 2009, there should be movement between emerging and developed nations. "The difference between the rate of growth of developed countries and of developing ones should be maintained and even expanded," he said, referring to the fact that in recent years developing nations have grown more than rich ones. "There may be further expansion in 2009, but this difference should return in 2010," he added.
In his evaluation, as Brazil is more prepared, it should leave the crisis better than other nations "and should help the global economy". Even with restricted credit on the international market, he believes that the country, if necessary may still generate sufficient savings to supply its financing needs. The BNDES itself estimates that investment perspectives in Brazil from 2009 to 2012, taking into consideration projects considered firm, alone, is 1.3 trillion reals (US$ 574 billion).
Even on the foreign market, Coutinho believes that the country should suffer less. This is because Brazil exports a large variety of commodities at prices that are highly competitive, and the retraction of foreign trade should reach the countries that produce more expensive products with greater strength.
He said that there is no way to forecast when the crisis should effectively end, but added that he hopes that by 2010 there should be some recovery of the international credit market.
*Translated by Mark Ament
